Wholesale Lending

Here is a copy of the letter.

It's not clear at this point whether it is addressed only at "under the hood" arrangements such as RS's tie-up with giffgaff, or also at explicit p2p loans to lenders.  It's arguable that occasional syndicated loans (even if there are several of them) should continue to be permitted notwithstanding the FCA's rather negative observations in the letter (around the turn of the page).  Time will tell.

Edit 1/3 at 2pm:  The giffgaff tie up is probably OK.  See p2pindependentforum.com/post/172246/thread and my response to it.

I've been trying to work my way through this and have also posted the below on the internal TC forum.

The BWOB Order referred to in the letter (attachment ending 1177_en) includes the following definition of Deposit Taking Business:

2.
(1) A person who carries on an activity of the kind specified by article 5 of the Regulated
Activities Order (accepting deposits) is not to be regarded as doing so by way of business if—
(a) he does not hold himself out as accepting deposits on a day to day basis; and
(b) any deposits which he accepts are accepted only on particular occasions, whether or
not involving the issue of any securities.
(2) In determining for the purposes of paragraph (1)(b) whether deposits are accepted only
on particular occasions, regard is to be had to the frequency of those occasions and to any
characteristics distinguishing them from each other.

My personal view is that on a natural reading the kind of syndicated lending that is arranged through TC should not be caught. Be that as it may, I think there should be another way out by virtue of the Regulated Activities Order (RAO) (attachment ending 0544_en):

5. …
(2) “deposit” means a sum of money, other than one excluded by any of articles 6 to 9…

9.
(1) Subject to paragraph (2), a sum is not a deposit for the purposes of article 5 if it is
received by a person as consideration for the issue by him of any investment of the kind specified
by article 77 or 78.
(2) [exception for some commercial paper, not applicable]

77.
(1) Subject to paragraph (2), such of the following as do not fall within article 78—
(a) debentures;
(b) debenture stock;
(c) loan stock;
(d) bonds;
(e) certificates of deposit;
(f) any other instrument creating or acknowledging indebtedness.
(2) … [exceptions not applicable]

It seems to me that, notwithstanding the comment in the penultimate paragraph on page 1 of the FCA’s letter, the exclusion granted by Article 9(1) of the RAO, together with Article 77(1)(f), should apply where p2p lenders are explicitly and with their full knowledge participating in syndicated loans to lenders. This is very different to what was happening on RS.

I think you are probably right.  Unless I'm mistaken we lend to giffgaff's customers and not to giffgaff itself.

www.altfi.com/article/2734_just_how_bad_is_the_peer_to_peer_lending_sectors_wholesale_problem

Interesting bit is the comments by crowdstacker which at face value may apply to the ablrate loans to ACF/APF if the structure is right.

I see RS have come up with a novel solution to WL - they just bought two of the companies that were an issue and part of a third so are ok to lend to/through them now. Dont seem to be worried re car loans either as two companies are engaged in that market