stub8535
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Post by stub8535 on Apr 19, 2017 9:37:05 GMT
As the FCA wrote to the CEO's of p2p companies about lending money to companies that then lend onwards themselves I have a concern about which I would like to ask forum members for their views.
On some platforms it is not immediately obvious which loans fall onto this category. I have spotted some that are trading at a premium. If the platform decide to ask the borrower to refinance elsewhere, in the short term, rather than remain in breach of regulations then any secondary market buyer will lose money.
This is a problem for new investors and for those that do not, or dont know how to, do detailed due dilligence. Particularly, in my view, given the prevalence of ifisa authorisation on less than well operated sites this will become worse and lead to miss selling claims.
I would call for sites with a secondary market that trade at other than par to stop secondary trading, or restrict to par, on loans that fall into this category and signify this is the reason.
What do forum members including site reps think please?
S
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ben
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Post by ben on Apr 19, 2017 9:51:31 GMT
It will only be on new loans, loans that have already been listed will not be effected.
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stub8535
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Post by stub8535 on Apr 19, 2017 22:39:40 GMT
Do you think so? Can't see platforms being allowed to continue breaking the law.
I wonder if any platforms that have this type of loan may wish to comment.
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ilmoro
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'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 19, 2017 23:01:33 GMT
Platforms where this is an issue will be liasing with the FCA on an orderly wind down of the relevant parts of the loans book. Platforms will have informed the FCA where they think they might be in breach of the rules and suggested a course of action. The FCA havent demanded they instantly dump the loans as that would be unfair.
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stub8535
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Post by stub8535 on Apr 19, 2017 23:29:07 GMT
ilmoro I would hope this is true on all platforms. I do not believe it to be true though. Shame the FCA has not issued guidance to protect investors from being caught out.
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Post by Deleted on Apr 20, 2017 7:35:26 GMT
due diligence is a requirement for P2P lenders, there is no such thing as a free lunch
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stub8535
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Post by stub8535 on Apr 20, 2017 7:41:29 GMT
@bobo agreed. Easier for seasoned users of p2p but much is concealed or the connections are not so obvious on first reading that new entrants riding the ifisa wave will be caught out.
It should be incumbent on the platforms that are in talks with borrowers to find alternative funding to tell lenders and potential lenders that this is the case or fave litigation for losses.
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dandy
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Post by dandy on Apr 20, 2017 9:25:52 GMT
AFAICS these are not new rules created by the FCA but rather a warning about possible breaches of existing rules so it is not as if the law has been changed mid-loans.
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stub8535
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Post by stub8535 on Apr 20, 2017 10:35:34 GMT
dandy. I would not be so certain as you seem to be. Good luck to those that continue their trading in loans of this nature. I hope I am proved wrong or that the platforms, who know they are doing this, put things right or employ a very good lawyer.
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ilmoro
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Post by ilmoro on Apr 20, 2017 10:45:14 GMT
dandy . I would not be so certain as you seem to be. Good luck to those that continue their trading in loans of this nature. I hope I am proved wrong or that the platforms, who know they are doing this, put things right or employ a very good lawyer. You seem to have particular loans in mind, do you actually know these loans are wholesale lending? A lot of stuff that appears to be wholesale lending apparently isnt because of the structure of the loans. www.p2pfinancenews.co.uk/2017/02/28/fca-wholesale-lending/Remember this issue has come to light as part of the authorisation process and many platforms will already have been in contact with FCA regarding any issues in advance of the general communication.
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stub8535
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Post by stub8535 on Apr 20, 2017 11:12:45 GMT
Yes. I have evidence, which will not be shared here in order to protect borrower and platform identification, ilmoroThe sites that are asking borrowers to look for alternative funding know who they are. They should be responsible for putting things in the public domain to protect investors and themselves. Maybe I should ask the fca for guidance directly. I will ponder that one for a while. |
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dandy
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Post by dandy on Apr 24, 2017 13:54:52 GMT
dandy . I would not be so certain as you seem to be. Good luck to those that continue their trading in loans of this nature. I hope I am proved wrong or that the platforms, who know they are doing this, put things right or employ a very good lawyer. I am only saying the rules have existed for a long time they havent just recently been introduced by FCA. So you would assume the platforms/lending companies that do this must do it in a compliant way.
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stub8535
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Post by stub8535 on Apr 24, 2017 14:59:47 GMT
dandy if that were true then why would fca write to all p2p ceo's with a warning? Toothless wonders maybe purring to encourage platforms to comply. Some will be taking sensible steps others will be taking silly steps and keeping investors uninformed until the cat turns into a lion with proper regulatory teeth. Who will be left nursing potential losses? Not the platforms that is for certain.
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dandy
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Post by dandy on Apr 27, 2017 9:24:47 GMT
well what type of loans are you referring to where you think lenders could end up suffering losses (purely as a result of the wholesale finance issue and non disclosure thereof)?
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stub8535
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Post by stub8535 on Apr 27, 2017 10:14:28 GMT
dandy. If someone purchases a loan in a company, that is a wholesale lender, on the secondary matket they see an interest rate based on the loan running to term. If they have purchased at a premium and the loan repays before the premium is covered by interest then tue loss is made. If platforms choose to ask borrowers to find finance elsewhere, as a result of the letter, without indicating this to lenders, or stopping trading for anything but par on those loans, then they are creating the loss by their actions. You can probably bet a sizeable chunk of your resources thay the platforms won't lose money and will not compensate for losses incurred. I was just raising awareness to encourage investors to consider the borrowers activity when doing due dilligence. If in doubt then investors can ask the platform and get the response in writing before buying.
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