nick
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Post by nick on Apr 13, 2015 18:37:21 GMT
Hi fellow members
I have just stumbled across MT and trying to get a handle on the credit exposures that lenders are exposed. Having quickly read the info on their site, my understanding is that in substance and from a legal prospective, lenders are making loans to MT. These loans are notionally associated with underlying loans that have been made by MT to borrowers indirectly (via partners, ie pawnbrokers) or directly, but ultimately our credit risk is MT itself plus the credit of the associated underlying loan (as default risk on these have been passed from MT to lenders). The structure would appear to be identical to Saving Stream. If this is the case, my main concern, as with Saving Stream, is the exposure to MT rather than direct exposure to individual borrowers in a true p2p set-up such as FC/Assetz etc.
Is my understanding above correct or have I missed something? Any comments/pointers from members more versed than me on MT are gratefully welcomed!
Thanks
Nick
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bugs4me
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Post by bugs4me on Apr 13, 2015 18:52:05 GMT
Hi fellow members I have just stumbled across MT and trying to get a handle on the credit exposures that lenders are exposed. Having quickly read the info on their site, my understanding is that in substance and from a legal prospective, lenders are making loans to MT. These loans are notionally associated with underlying loans that have been made by MT to borrowers indirectly (via partners, ie pawnbrokers) or directly, but ultimately our credit risk is MT itself plus the credit of the associated underlying loan (as default risk on these have been passed from MT to lenders). The structure would appear to be identical to Saving Stream. If this is the case, my main concern, as with Saving Stream, is the exposure to MT rather than direct exposure to individual borrowers in a true p2p set-up such as FC/Assetz etc. Is my understanding above correct or have I missed something? Any comments/pointers from members more versed than me on MT are gratefully welcomed! Thanks Nick Probably Ed from MoneyThing is best placed to answer. He is very active around these parts.
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Post by MoneyThing on Apr 13, 2015 19:12:49 GMT
Hi Nick,
MoneyThing either buys loans from it's Partner network (just Cash Shop Ltd at the moment), or lends directly to borrowers.
In the former the loans are Assigned to MoneyThing by the Cash Shop (under a Deed of Assignment). In the latter, it is simply MoneyThing lending directly to consumers/businesses under our own Loan Agreement.
MoneyThing then places these 'live' loans (i.e. already interest generating) on the MoneyThing platform and makes them available for investors to buy whole/part loans from MoneyThing. When this happens, a further Deed of Assignment is generated as a living document which exists between MoneyThing and the Investor(s) for each of the loans.
In summary, MoneyThing could be considered as an online 'Loan Shop', rather than the traditional P2P model of a 'Dating Site' (matching lenders and borrowers).
I hope this helps.
Kind regards,
Ed
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 13, 2015 19:49:44 GMT
Hi fellow members I have just stumbled across MT and trying to get a handle on the credit exposures that lenders are exposed. Having quickly read the info on their site, my understanding is that in substance and from a legal prospective, lenders are making loans to MT. These loans are notionally associated with underlying loans that have been made by MT to borrowers indirectly (via partners, ie pawnbrokers) or directly, but ultimately our credit risk is MT itself plus the credit of the associated underlying loan (as default risk on these have been passed from MT to lenders). The structure would appear to be identical to Saving Stream. If this is the case, my main concern, as with Saving Stream, is the exposure to MT rather than direct exposure to individual borrowers in a true p2p set-up such as FC/Assetz etc. Is my understanding above correct or have I missed something? Any comments/pointers from members more versed than me on MT are gratefully welcomed! Thanks Nick One thing to note is that the initial risk is born by the partner, in the case of the CS originated loans, & MT, in the case of their own loans (I think - cant find relevant post), as they guarantee to repay the capital & interest at term.(therefore a borrower default is not a direct issue for lenders). There are, therefore, two scenarios that have to be considered - the failure of the partner or the failure of MT. In the former case, MT have the deeds of assignment so would seek to recover the items & then presumably manage the loans to term themselves/recover the outstanding sums though sale of assets. In the later case, I believe we would be in a similar situation to SS and reliant on recovery though administrators/receivers who would work with the partner to fulfill MTs obligations. I know Ed said at the beginning that ultimately he was looking to set up a mechanism, Trust, to manage the loan book in the event of MTs failure but this hasnt occurred yet. p2pindependentforum.com/post/38367/thread
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nick
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Post by nick on Apr 14, 2015 9:03:39 GMT
Hi Nick, MoneyThing either buys loans from it's Partner network (just Cash Shop Ltd at the moment), or lends directly to borrowers. In the former the loans are Assigned to MoneyThing by the Cash Shop (under a Deed of Assignment). In the latter, it is simply MoneyThing lending directly to consumers/businesses under our own Loan Agreement. MoneyThing then places these 'live' loans (i.e. already interest generating) on the MoneyThing platform and makes them available for investors to buy whole/part loans from MoneyThing. When this happens, a further Deed of Assignment is generated as a living document which exists between MoneyThing and the Investor(s) for each of the loans. In summary, MoneyThing could be considered as an online 'Loan Shop', rather than the traditional P2P model of a 'Dating Site' (matching lenders and borrowers). I hope this helps. Kind regards, Ed Hi Ed Thank you for your response. Just to clarify, can you confirm that when an investor buys whole/part loans from MT, the loan is assigned under a Deed of Assignment such that the investor has assignment of cash repayments and underlying security. Were MT to go into liquidation, how would this affect investors? Would investors be treated as a secured creditors in respect of amounts owed (current and future) under the Deed of Assignment? Thanks Nick
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Post by MoneyThing on Apr 14, 2015 9:13:33 GMT
Hi Nick, MoneyThing either buys loans from it's Partner network (just Cash Shop Ltd at the moment), or lends directly to borrowers. In the former the loans are Assigned to MoneyThing by the Cash Shop (under a Deed of Assignment). In the latter, it is simply MoneyThing lending directly to consumers/businesses under our own Loan Agreement. MoneyThing then places these 'live' loans (i.e. already interest generating) on the MoneyThing platform and makes them available for investors to buy whole/part loans from MoneyThing. When this happens, a further Deed of Assignment is generated as a living document which exists between MoneyThing and the Investor(s) for each of the loans. In summary, MoneyThing could be considered as an online 'Loan Shop', rather than the traditional P2P model of a 'Dating Site' (matching lenders and borrowers). I hope this helps. Kind regards, Ed Hi Ed Thank you for your response. Just to clarify, can you confirm that when an investor buys whole/part loans from MT, the loan is assigned under a Deed of Assignment such that the investor has assignment of cash repayments and underlying security. Were MT to go into liquidation, how would this affect investors? Would investors be treated as a secured creditors in respect of amounts owed (current and future) under the Deed of Assignment? Thanks Nick Morning Nick, I can confirm that Investors who have bought whole/part loans from MoneyThing do so under a Deed of Assigment for each of the loans they are invested in. This agreement assigns the underlying security (by %) as well as the repayment of 1% per month (based on the proportion/amount invested into that particular loan). Thus in the event of MT going into Administration, the Investors would be secured creditors and first in line upon wind down of the loan book by the Administrator. Kind regards, Ed
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webwiz
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Post by webwiz on Apr 14, 2015 15:09:12 GMT
If this structure works on MT why not on SS? IMHO SS is far more vulnerable than MT.
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sqh
Member of DD Central
Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Apr 15, 2015 5:47:51 GMT
If this structure works on MT why not on SS? IMHO SS is far more vulnerable than MT. I think we need clarification from the FCA. I find P2P regulation impossible to understand. I'm not aware of any P2P platforms that have full FCA regulation, although most have Interim Permission. MT don't even have Interim P2P lending permission, but Lendy does. search and select permissions fca-consumer-credit-interim.force.com/CS_RegisterSearchPageNew
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Post by MoneyThing on Apr 15, 2015 8:07:14 GMT
If this structure works on MT why not on SS? IMHO SS is far more vulnerable than MT. I think we need clarification from the FCA. I find P2P regulation impossible to understand. I'm not aware of any P2P platforms that have full FCA regulation, although most have Interim Permission. MT don't even have Interim P2P lending permission, but Lendy does. search and select permissions fca-consumer-credit-interim.force.com/CS_RegisterSearchPageNewMorning, Just to mention that any new P2P platforms (like us) that were formed after the 1st of April 2014 (when the move occurred between the OFT to the FCA), were unable to include P2P Lending on the FCA Register whilst those that were formed prior to 1st April 2014 were. For your interest, MoneyThing's allocated window to apply for full FCA authorisation opened on the 1st February 2015 and closes on the 31st May 2015. Kind regards, Ed
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sqh
Member of DD Central
Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
Posts: 1,426
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Post by sqh on Apr 15, 2015 9:23:47 GMT
I think we need clarification from the FCA. I find P2P regulation impossible to understand. I'm not aware of any P2P platforms that have full FCA regulation, although most have Interim Permission. MT don't even have Interim P2P lending permission, but Lendy does. search and select permissions fca-consumer-credit-interim.force.com/CS_RegisterSearchPageNewMorning, Just to mention that any new P2P platforms (like us) that were formed after the 1st of April 2014 (when the move occurred between the OFT to the FCA), were unable to include P2P Lending on the FCA Register whilst those that were formed prior to 1st April 2014 were. For your interest, MoneyThing's allocated window to apply for full FCA authorisation opened on the 1st February 2015 and closes on the 31st May 2015. Kind regards, Ed Hi Ed Very Interesting, will you be applying for full FCA authorisation? Out of interest, do you know if the platforms with Interim permissions have to get upgraded to full FCA authorisation by 31st May 2015?
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Post by MoneyThing on Apr 15, 2015 9:42:41 GMT
Morning, Just to mention that any new P2P platforms (like us) that were formed after the 1st of April 2014 (when the move occurred between the OFT to the FCA), were unable to include P2P Lending on the FCA Register whilst those that were formed prior to 1st April 2014 were. For your interest, MoneyThing's allocated window to apply for full FCA authorisation opened on the 1st February 2015 and closes on the 31st May 2015. Kind regards, Ed Hi Ed Very Interesting, will you be applying for full FCA authorisation? Out of interest, do you know if the platforms with Interim permissions have to get upgraded to full FCA authorisation by 31st May 2015? Hi, We are well under way with regards to our full authorisation application and have already started to complete this and should be done with time to spare before the 31st May. The FCA then allow up to 6 months post the 31st May to review the application and grant full permission. (Note that all firms with Interim permissions undertaking all forms of Consumer Credit activity need to apply for full permission before their window closes otherwise they will no longer be able to trade). For planning & resource purposes, the FCA have allocated different 'windows' for different types of activity. These windows started on the 1st October 2014 and will last up to 31st March 2016. There is however no public record of when each firms window is open and different firms are given different windows depending on their type of activity, their complexity & also by region. For example, I am aware of a couple of high street pawnbrokers that undertake pawnbroking, payday lending and cheque cashing activities; their submission deadline was at the end of February this year. Kind regards, Ed
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coop
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Post by coop on Apr 15, 2015 9:48:35 GMT
Not content with his workload at MoneyThing; Ed branches out in new role as FCA Press Officer. But seriously you communicate this stuff a lot clearer than they do  |
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nick
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Post by nick on Apr 15, 2015 15:26:34 GMT
Morning Nick, I can confirm that Investors who have bought whole/part loans from MoneyThing do so under a Deed of Assigment for each of the loans they are invested in. This agreement assigns the underlying security (by %) as well as the repayment of 1% per month (based on the proportion/amount invested into that particular loan). Thus in the event of MT going into Administration, the Investors would be secured creditors and first in line upon wind down of the loan book by the Administrator. Kind regards, Ed Hi Ed Thanks for the prompt reponse. Now its been more fully explained, I'm more comfortable with the structure and it would appear that investors have less credit exposure to MT than I had first assessed. Thanks Nick
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