riskanalyst
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P2p platforms not independently audited - Ponzi Scheme risk?
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Post by riskanalyst on Jun 19, 2017 10:26:27 GMT
As an ex-banker and risk analyst I can ensure investors that none of the institutions I worked with ever lent without seeing audited accounts. As just one example, I recently corresponded at length with Zopa and was told that their platform is NOT independently audited - only the managing company.
I've taken my finds out. I prefer to avoid the risk that my 'lending' just might be recycled, 'Ponzi Scheme' style. However experienced a company appears to be, these platforms are very complex indeed there is no independent verification (random, independent audit sampling) to verify that funds going into the platform are indeed being lent to new borrowers and not used to fund shortfalls in repayments from existing, defaulted loans (or even just 'misappropriated' !
I raised this formally with the FCA who confirmed there is no platform audit requirement under their requirements for authorisation; they then refused to discuss the matter or confirm any further interest.
With some £10 billion apparently now invested via P2P I question whether the 'Fully Authorised' FCA status can be relied on at any level.
The FCA should require all P2P platforms to publicly certify compliance with a basic set of safeguards, including independent audit.
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mary
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Post by mary on Jun 19, 2017 10:39:10 GMT
As an ex-banker and risk analyst I can ensure investors that none of the institutions I worked with ever lent without seeing audited accounts. As just one example, I recently corresponded at length with Zopa and was told that their platform is NOT independently audited - only the managing company. I've taken my finds out. I prefer to avoid the risk that my 'lending' just might be recycled, 'Ponzi Scheme' style. However experienced a company appears to be, these platforms are very complex indeed there is no independent verification (random, independent audit sampling) to verify that funds going into the platform are indeed being lent to new borrowers and not used to fund shortfalls in repayments from existing, defaulted loans (or even just 'misappropriated' ! I raised this formally with the FCA who confirmed there is no platform audit requirement under their requirements for authorisation; they then refused to discuss the matter or confirm any further interest. With some £10 billion apparently now invested via P2P I question whether the 'Fully Authorised' FCA status can be relied on at any level. The FCA should require all P2P platforms to publicly certify compliance with a basic set of safeguards, including independent audit. Here Here! And then there are those that appear unable to achieve full FCA like RateSetter. And if you want to see extreme risks take a look at Bondmason, where you invest with one company, that buys a receivable from a related company, that invests in loans on undisclosed other P2P platforms on your behalf and which it is explicitly stated that you have no call on the actual loan!
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ozboy
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Post by ozboy on Jun 19, 2017 11:08:14 GMT
As an ex-banker and risk analyst I can ensure investors that none of the institutions I worked with ever lent without seeing audited accounts. As just one example, I recently corresponded at length with Zopa and was told that their platform is NOT independently audited - only the managing company. I've taken my finds out. I prefer to avoid the risk that my 'lending' just might be recycled, 'Ponzi Scheme' style. However experienced a company appears to be, these platforms are very complex indeed there is no independent verification (random, independent audit sampling) to verify that funds going into the platform are indeed being lent to new borrowers and not used to fund shortfalls in repayments from existing, defaulted loans (or even just 'misappropriated' ! I raised this formally with the FCA who confirmed there is no platform audit requirement under their requirements for authorisation; they then refused to discuss the matter or confirm any further interest.With some £10 billion apparently now invested via P2P I question whether the 'Fully Authorised' FCA status can be relied on at any level. The FCA should require all P2P platforms to publicly certify compliance with a basic set of safeguards, including independent audit. Here Here! And then there are those that appear unable to achieve full FCA like RateSetter. And if you want to see extreme risks take a look at Bondmason, where you invest with one company, that buys a receivable from a related company, that invests in loans on undisclosed other P2P platforms on your behalf and which it is explicitly stated that you have no call on the actual loan! Thanks riskanalyst, I know the FCA are useless, but tbh I'm shocked at this, it takes the biscuit, just what does The FCA actually DO??!!!! Oh, I remember now, Football Association. 
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Post by yorkshireman on Jun 19, 2017 11:44:51 GMT
I question whether the 'Fully Authorised' FCA status can be relied on at any level. The simple answer is that it can’t be relied on, it’s just another toothless job creation scheme for the financial sector, aka jobs for the boys and girls.
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macq
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Post by macq on Jun 19, 2017 11:55:57 GMT
it would be interesting to know how many people work for the FCA and how many products they have to oversee.My guess is that they don't have enough man hours(can i still say that?  )to do a thorough job |
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ozboy
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Post by ozboy on Jun 19, 2017 12:08:24 GMT
I question whether the 'Fully Authorised' FCA status can be relied on at any level. Yep.
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Post by easteregg on Jun 19, 2017 12:13:57 GMT
it would be interesting to know how many people work for the FCA and how many products they have to oversee.My guess is that they don't have enough man hours(can i still say that? )to do a thorough job From the FCA's 2015/16 annual report:
- As at 31 March 2016 we had 3,337 staff
- Staff turnover was 11.5%
- Improved our ranking in Stonewall’s Top 100 Employers from 82 to 40
- Delivered 6,400 training days to our staff
Given that they have also taken years to approve some of the peer-to-peer platforms I don't think getting FCA approval is simply a rubber-stamping excercise.
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Post by yorkshireman on Jun 19, 2017 12:18:57 GMT
it would be interesting to know how many people work for the FCA and how many products they have to oversee.My guess is that they don't have enough man hours(can i still say that? )to do a thorough job I disagree about the time element, bodies such as the FCA or Ombudsmen are just toothless tigers. For example, some time ago, admittedly before the FCA appeared on the scene, I wanted to buy an annuity with a pension plan that clearly stated the retirement age as 60 yet Aviva refused to allow the annuity purchase for some arcane technicality. After my IFA drew a blank with Aviva, I took the complaint to the Financial Ombudsman who was as much use as a chocolate teapot saying it was not within their remit and it was only after threatening Aviva with legal action that the issue was resolved, I received a reasonable financial goodwill gesture and I was eventually allowed to buy the annuity. My point being that these organisations talk the talk but are of no assistance when required.
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macq
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Post by macq on Jun 19, 2017 12:28:32 GMT
it would be interesting to know how many people work for the FCA and how many products they have to oversee.My guess is that they don't have enough man hours(can i still say that? )to do a thorough job I disagree about the time element, bodies such as the FCA or Ombudsmen are just toothless tigers. For example, some time ago, admittedly before the FCA appeared on the scene, I wanted to buy an annuity with a pension plan that clearly stated the retirement age as 60 yet Aviva refused to allow the annuity purchase for some arcane technicality. After my IFA drew a blank with Aviva, I took the complaint to the Financial Ombudsman who was as much use as a chocolate teapot saying it was not within their remit and it was only after threatening Aviva with legal action that the issue was resolved, I received a reasonable financial goodwill gesture and I was eventually allowed to buy the annuity. My point being that these organisations talk the talk but are of no assistance when required. Would seem from another post that they have the staff so using your example may be it comes down to the legislation that they have to work with.
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ilmoro
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Post by ilmoro on Jun 19, 2017 12:39:59 GMT
I question whether the 'Fully Authorised' FCA status can be relied on at any level. The simple answer is that it can’t be relied on, it’s just another toothless job creation scheme for the financial sector, aka jobs for the boys and girls. Well they need a new chairman next year if you're available 
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ozboy
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Post by ozboy on Jun 19, 2017 12:43:26 GMT
I disagree about the time element, bodies such as the FCA or Ombudsmen are just toothless tigers. For example, some time ago, admittedly before the FCA appeared on the scene, I wanted to buy an annuity with a pension plan that clearly stated the retirement age as 60 yet Aviva refused to allow the annuity purchase for some arcane technicality. After my IFA drew a blank with Aviva, I took the complaint to the Financial Ombudsman who was as much use as a chocolate teapot saying it was not within their remit and it was only after threatening Aviva with legal action that the issue was resolved, I received a reasonable financial goodwill gesture and I was eventually allowed to buy the annuity. My point being that these organisations talk the talk but are of no assistance when required. Would seem from another post that they have the staff so using your example may be it comes down to the legislation that they have to work with. I worked in Financial Services many moons ago and these Various Authorities are often staffed by the failures from the Commercial Sector - the "Brightest and Best" they aint.
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macq
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Post by macq on Jun 19, 2017 12:46:34 GMT
at this rate i will be having another sleepless night but not due to the heat this time!
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Post by yorkshireman on Jun 19, 2017 13:09:31 GMT
The simple answer is that it can’t be relied on, it’s just another toothless job creation scheme for the financial sector, aka jobs for the boys and girls. Well they need a new chairman next year if you're available Unfortunately they couldn’t afford me, which is their loss as I’ve never worked in the financial sector which would make me an ideal candidate for the role or indeed many jobs in the City. 
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riskanalyst
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P2p platforms not independently audited - Ponzi Scheme risk?
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Post by riskanalyst on Jun 19, 2017 13:51:05 GMT
Thanks all, for the interesting replies so far.
As for easteregg's comments (who runs a P2P platform site), well, FCA Approval may not be a rubber stamp but neither is it transparent and trustworthy if this is the standard.
Wait for the first fraud and then let's see who has slipped through....
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pom
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Post by pom on Jun 19, 2017 17:53:36 GMT
it would be interesting to know how many people work for the FCA and how many products they have to oversee.My guess is that they don't have enough man hours(can i still say that? )to do a thorough job From the FCA's 2015/16 annual report:
- As at 31 March 2016 we had 3,337 staff
- Staff turnover was 11.5%
- Improved our ranking in Stonewall’s Top 100 Employers from 82 to 40
- Delivered 6,400 training days to our staff
Given that they have also taken years to approve some of the peer-to-peer platforms I don't think getting FCA approval is simply a rubber-stamping excercise.
How reassuring. The problem is that a lot of companies/organisations that boast about the amount of education their staff receive invariably inflate those figures by making their staff book things as "education" that are a whole load of complete tosh.
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)to do a thorough job
