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Post by martin44 on Mar 16, 2018 14:04:22 GMT
Mrc thanks.. somehow, it does not surprise me that they had no authorisation, be it interim or anything else. It surprised everyone else, including Col and presumably the FCA, when they found out and took action. The force must be strong in you. Aah .. some people are more surprised than others. 
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micky
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Post by micky on Mar 16, 2018 14:12:20 GMT
I thought you might pop up with a cheeky reply.  |
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mason
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Post by mason on Mar 16, 2018 16:33:25 GMT
This also seems the most likely explanation to me. However, it should be made clear that Collateral was on the FCA register right up until the time it was found that it didn't have permission, so for all intents and purposes it did have interim authorisation from the FCA, even if the FCA now regards Collateral not to have been eligible for interim permissions. The register still shows the start and end date that interim permissions were applied to Collateral. They will have been on the FCA register, but perhaps not authorised specifically for p2p - as nick's posts on another thread asked, without a satisfactory response. p2pindependentforum.com/thread/7708/regulatory-permissions It all points to an administration caused by a 'discovered' lack of authorisation, and the expected consequential financial difficulties, rather than any current financial difficulties. Money back? I think nothing until they have a complete understanding of the position of the business - including all the creditor claims. Then restoration of repayments and return of client money held as cash (including pending loans cancelled). Months but not years?
Interim permissions are by their nature not specific for P2P. They are supposed to bridge the gap between a firm losing their OFT Consumer Credit Licence and gaining full authorisation from the FCA. So their situation was indistinguishable from other P2P companies at the time (and some who are not yet fully authorised to date). I agree with your analysis of how things are likely to proceed. I had hoped for a return of uninvested cash in the short term, but it appears the FCA may be taking a more active role in proceedings, so that is bound to slow things down.
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blender
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Post by blender on Mar 16, 2018 17:26:18 GMT
I mean that it seems likely, from Nick's valuable contributions in the referenced thread, that they had an FCA interim permission, but that its scope may not have included running a p2p platform. That seems to fit all the factual evidence, and would explain why they had a permission but did not have permission, and why they believed that they had p2p permission, but did not. I don't think we need to look for evil doers or devious actions here. Perhaps just errors, with dramatic consequences.
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shimself
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Post by shimself on Mar 16, 2018 17:39:33 GMT
I mean that it seems likely, from Nick's valuable contributions in the referenced thread, that they had an FCA interim permission, but that its scope may not have included running a p2p platform. That seems to fit all the factual evidence, and would explain why they had a permission but did not have permission, and why they believed that they had p2p permission, but did not. I don't think we need to look for evil doers or devious actions here. Perhaps just errors, with dramatic consequences. That does not accord with their having paid for posh legal advice which said that they did have permission.
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mason
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Post by mason on Mar 16, 2018 17:44:56 GMT
I mean that it seems likely, from Nick's valuable contributions in the referenced thread, that they had an FCA interim permission, but that its scope may not have included running a p2p platform. That seems to fit all the factual evidence, and would explain why they had a permission but did not have permission, and why they believed that they had p2p permission, but did not. I don't think we need to look for evil doers here, perhaps just errors, with dramatic consequences. It's possible, but Nick did also consider some reasons why specific permissions for P2P might not have been required. He mentioned, for example, that MT also did not have the specific P2P permission at that time. The events of late January 2018 seem to relate to a separate matter, namely that permissions were originally issued to a different company.
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ceejay
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Post by ceejay on Mar 17, 2018 9:53:01 GMT
... When a financial company goes under, the FSCS automatically refunds savings within seven days of taking control of it. That is a very good reference/goal of the ideal timing that anyone should keep in mind when dealing with customers' money. I guess the real problem is the balancing of accounts. Once this is done (and 20 days should have been more than sufficient for that), there is no obvious legal reason for the administrator to withhold that money which is not part of the company assets. ... Is this not somewhat complicated by the fact that the client funds will be a continually moving target as loan repayments are (hopefully!) continuing to be made?
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elliotn
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Post by elliotn on Mar 17, 2018 12:54:14 GMT
I mean that it seems likely, from Nick's valuable contributions in the referenced thread, that they had an FCA interim permission, but that its scope may not have included running a p2p platform. That seems to fit all the factual evidence, and would explain why they had a permission but did not have permission, and why they believed that they had p2p permission, but did not. I don't think we need to look for evil doers here, perhaps just errors, with dramatic consequences. It's possible, but Nick did also consider some reasons why specific permissions for P2P might not have been required. He mentioned, for example, that MT also did not have the specific P2P permission at that time. The events of late January 2018 seem to relate to a separate matter, namely that permissions were originally issued to a different company. MT and abl did not have specific p2p IP but both had credit broker permissions (introducing borrowers/lenders) amongst others from activities preceeding their p2p platforms (ie MT morphed from a mortage co) which were presumably deemed sufficient - if Collateral was developed from the consumer credit permission for the pawnbroker antecedent this presumably was not.
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mason
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Post by mason on Mar 17, 2018 13:37:06 GMT
It's possible, but Nick did also consider some reasons why specific permissions for P2P might not have been required. He mentioned, for example, that MT also did not have the specific P2P permission at that time. The events of late January 2018 seem to relate to a separate matter, namely that permissions were originally issued to a different company. MT and abl did not have specific p2p IP but both had credit broker permissions (introducing borrowers/lenders) amongst others from activities preceeding their p2p platforms (ie MT morphed from a mortage co) which were presumably deemed sufficient - if Collateral was developed from the consumer credit permission for the pawnbroker antecedent this presumably was not. Well, when you put it like that, it seems like something a fancy lawyer really ought to have spotted. Even more so than the non-transferability of regulatory permissions between separate companies.
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mason
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Post by mason on Mar 17, 2018 13:46:55 GMT
Is this not somewhat complicated by the fact that the client funds will be a continually moving target as loan repayments are (hopefully!) continuing to be made? Normally the balancing is a procedure a financial company runs at least once a day. It is a very common process. I am sure Collateral will have procedures in place for it already. Once the first reconciliation of funds is ok, the administrator will have the control of any (eventual) additional cash coming in without problems. I would personally first distribute the initial funds (funds not part of the Collateral assets at all) as per frozen situation of 28/02/18. Then decide the general strategy (for example one distribution a month of recovered funds, after taking off the Collateral fees) and apply it regularly while disposing of the other loans. Thinking back to my personal experience with an FSCS claim (the Icelandic banking debacle), the way in which funds were repaid was for the website to be reopened so that people could be consented and confirm their payment details. It's within the realms of possibility that a similar process could be followed, in which case we're back to waiting on the IT contractor. At the very least, there will need to be some mechanism in place for people to update their bank details and/or current address (if we will be receiving cheques).
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blender
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Post by blender on Mar 17, 2018 14:27:27 GMT
Is this not somewhat complicated by the fact that the client funds will be a continually moving target as loan repayments are (hopefully!) continuing to be made? Normally the balancing is a procedure a financial company runs at least once a day. It is a very common process. I am sure Collateral will have procedures in place for it already. Once the first reconciliation of funds is ok, the administrator will have the control of any (eventual) additional cash coming in without problems. I would personally first distribute the initial funds (funds not part of the Collateral assets at all) as per frozen situation of 28/02/18. Then decide the general strategy (for example one distribution a month of recovered funds, after taking off the Collateral fees) and apply it regularly while disposing of the other loans. My suggestion of months rather than years for the client money was meant to be comforting to those who were worried about loss and very long processes. So, months was meant to be at the outside, and I recognize that you may well be right with weeks - though it is now 17 days and I count from the date of administration. If actually needing money soon, I would not rely on it in March, for example. Once they are sure the funds are properly segregated and who is owed what, and that there is no possibility of a creditor having a claim, then they have to think of how to make the payments. A p2p platform will be an unfamiliar mechanism for the administrators, and they will want to be sure that whatever they do it will not compromise the restarting of the platform. Their first duty is to the creditors. They will need to understand the platform, and if they make any manual payments outside of the platform, they will later have to alter balances on it and reconcile, presumably with repayments being made all the time. I would think they might wish to allow the monies to go back via the platform, and it would be worth waiting a little for that. It's easier, cheaper to do and does not compromise the options for continuation.
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Post by petebutt43 on Mar 18, 2018 20:49:03 GMT
Normally the balancing is a procedure a financial company runs at least once a day. It is a very common process. I am sure Collateral will have procedures in place for it already. Once the first reconciliation of funds is ok, the administrator will have the control of any (eventual) additional cash coming in without problems. I would personally first distribute the initial funds (funds not part of the Collateral assets at all) as per frozen situation of 28/02/18. Then decide the general strategy (for example one distribution a month of recovered funds, after taking off the Collateral fees) and apply it regularly while disposing of the other loans. Thinking back to my personal experience with an FSCS claim (the Icelandic banking debacle), the way in which funds were repaid was for the website to be reopened so that people could be consented and confirm their payment details. It's within the realms of possibility that a similar process could be followed, in which case we're back to waiting on the IT contractor. At the very least, there will need to be some mechanism in place for people to update their bank details and/or current address (if we will be receiving cheques). Cheques!1  cheques are no bloody use to me!!
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shimself
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Post by shimself on Mar 19, 2018 17:37:03 GMT
Thinking back to my personal experience with an FSCS claim (the Icelandic banking debacle), the way in which funds were repaid was for the website to be reopened so that people could be consented and confirm their payment details. It's within the realms of possibility that a similar process could be followed, in which case we're back to waiting on the IT contractor. At the very least, there will need to be some mechanism in place for people to update their bank details and/or current address (if we will be receiving cheques). Cheques!1 cheques are no bloody use to me!! Sign it on the back and send it on to me, I'll give you a good rate honest
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hantsowl
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Post by hantsowl on Mar 20, 2018 18:53:14 GMT
Not sure if it has been posted already, but this provides a pretty good summary of the situation so far... Summary |
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kaya
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Post by kaya on Mar 20, 2018 19:21:39 GMT
Nice report. In particular:
Isn’t Having An Administrator In Charge A Good Thing?
Not always as it depends on the administrator. Administrators are put in place by companies to oversee failure or insolvency. The issue here is that the administrator is chosen by the company that failed, possibly meaning the company has some connections to the administrator. The question then becomes, does the administrator have the companies or lenders best interests at heart?
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cheques are no bloody use to me!!
