justme
Member of DD Central
Posts: 203 
Likes: 89
|
Post by justme on Apr 12, 2018 18:33:22 GMT
Having just read a letter from Collateral administrators which states that lenders are considered to be platform's creditors I am utterly confused. If it was indeed
so I do not see how all this p2p lending was viable - it makes any diversificatiin and loan choosing pointless and it equals to buying one entity bonds in my mind. Have I misunderstood anything ?
|
|
empirica
Member of DD Central
Posts: 326
Likes: 235
|
Post by empirica on Apr 12, 2018 19:46:11 GMT
Yes, I'm similarly confused by that communication - which may speak more to the author than the content, but what do I know.
There is talk of a Living Will on the Collateral forum along with mention of such a document / facility / process being an FCA requirement. This all suggests to me that some thought has been given to the run-off arrangements in the event of platform's demise, so maybe the platform reps here could advise on how its' appointed administrators would view 'investors' or 'lenders' in such circumstances?
|
|
|
|
Post by elephantrosie on Apr 13, 2018 4:52:32 GMT
Having just read a letter from Collateral administrators which states that lenders are considered to be platform's creditors I am utterly confused. If it was indeed so I do not see how all this p2p lending was viable - it makes any diversificatiin and loan choosing pointless and it equals to buying one entity bonds in my mind. Have I misunderstood anything ? you hit the nail on the head
|
|
mason
Member of DD Central
Posts: 666 
Likes: 641
|
Post by mason on Apr 13, 2018 5:49:13 GMT
Having just read a letter from Collateral administrators which states that lenders are considered to be platform's creditors I am utterly confused. If it was indeed so I do not see how all this p2p lending was viable - it makes any diversificatiin and loan choosing pointless and it equals to buying one entity bonds in my mind. Have I misunderstood anything ? Not at all. Collateral was operating illegally, so until such time as it can be established that lenders money was actually advanced to borrowers and that valid loan agreements were drawn up, all that we know for sure is we transferred money into a bank account controlled by COL and COL now can't pay us any interest or repay our capital. P2P firms that have valid FCA authorisation would be treated differently. But... diversification across different platforms has always been recommended here to mitigate platform risk - this being an example of such a risk.
|
|
IFISAcava
Member of DD Central
Posts: 3,692
Likes: 3,018
|
Post by IFISAcava on Apr 13, 2018 6:42:15 GMT
Having just read a letter from Collateral administrators which states that lenders are considered to be platform's creditors I am utterly confused. If it was indeed so I do not see how all this p2p lending was viable - it makes any diversificatiin and loan choosing pointless and it equals to buying one entity bonds in my mind. Have I misunderstood anything ? Not at all. Collateral was operating illegally, so until such time as it can be established that lenders money was actually advanced to borrowers and that valid loan agreements were drawn up, all that we know for sure is we transferred money into a bank account controlled by COL and COL now can't pay us any interest or repay our capital. P2P firms that have valid FCA authorisation would be treated differently. But... diversification across different platforms has always been recommended here to mitigate platform risk - this being an example of such a risk. Well, regarding cash on account, we know that they THOUGHT they were acting under FCA rules, so they would have had a separate client account, but I am not sure that the subsequent lack of FCA permission means that the client account is no longer valid. Same for loan agreements - they would have been set out AS IF they had FCA approval, so why would they be invalid?
|
|
pikestaff
Member of DD Central
Posts: 2,187
Likes: 1,546
|
Post by pikestaff on Apr 13, 2018 7:26:19 GMT
Having just read a letter from Collateral administrators which states that lenders are considered to be platform's creditors I am utterly confused. If it was indeed so I do not see how all this p2p lending was viable - it makes any diversificatiin and loan choosing pointless and it equals to buying one entity bonds in my mind. Have I misunderstood anything ? Provided everything is done properly we should not be a platform's creditors in the usual sense of the word. Certainly not in respect of money actually lent. There is a suggestion in the Collateral thread that the present "administrators" (who may not actually be the administrators, because the FCA is contesting their appointment) have changed their mind on this point and that it is the FCA who have told them lenders are creditors. I think it might be more subtle than that. The law sets out the duties of an administrator to a company and its creditors. If we are neither, what duties does an administrator have to us? I'd not be surprised if the FCA had said, for the purpose of an administration, the adminstrator must treat lenders as if they were a special type of secured creditor. That's not quite the same thing as saying we actually are creditors.
|
|
archie
Posts: 1,866
Likes: 1,861
|
Post by archie on Apr 13, 2018 7:35:33 GMT
They can call me whatever they want as long as I get my investment back.  |
|
hector
Member of DD Central
Posts: 122
Likes: 162
|
Post by hector on Apr 13, 2018 8:51:49 GMT
They can call me whatever they want as long as I get my investment back. Baldy?😏
|
|
|
|
Post by Butch Cassidy on Apr 13, 2018 9:04:00 GMT
I concur with pikestaff assessment & furthermore, whilst the latest 12/4/18 letter does appear to use rather sloppy language regarding creditors as opposed to lenders that could well be resultant of the court ruling restrictions. I do however believe that from an administration viewpoint it could be explained due to the structure of the collateral loanbook; All the loans are specific, independent, stand alone entities, that are then secured against a SPECIFIC ASSET, whether bling, vehicle, property whatever.
Collateral (acting as agent for the lender) then takes in some cases physical possession or at least a charge against the title of that borrowers specific related asset & holds them in trust on behalf of lenders. So effectively becoming assets, albeit secured & directly relating to specific lenders/loanholders, on the Collateral balance sheet, so it could easily be inferred that lenders were indeed secured creditors on that basis. I would personally prefer the term lender as the contract was directly between lenders & borrowers, with Collateral being limited to the agent & enabling intermediary, albeit also acting as secure repository for the asset or charge secured against the title of that asset.
Until the FCA inspired court action is resolved, hopefully at the end of this month, communication will by necessity be limited & only add to the confusion.
|
|
mason
Member of DD Central
Posts: 666
Likes: 641
|
Post by mason on Apr 13, 2018 11:36:49 GMT
Not at all. Collateral was operating illegally, so until such time as it can be established that lenders money was actually advanced to borrowers and that valid loan agreements were drawn up, all that we know for sure is we transferred money into a bank account controlled by COL and COL now can't pay us any interest or repay our capital. P2P firms that have valid FCA authorisation would be treated differently. But... diversification across different platforms has always been recommended here to mitigate platform risk - this being an example of such a risk. Well, regarding cash on account, we know that they THOUGHT they were acting under FCA rules, so they would have had a separate client account, but I am not sure that the subsequent lack of FCA permission means that the client account is no longer valid. Same for loan agreements - they would have been set out AS IF they had FCA approval, so why would they be invalid? Cash held in the clients account might be on somewhat safer ground, but I'm more concerned about the money held in "loans". I would presume that the largest part of most COL lenders capital was "on loan" when COL went into administration. Until there is clarity - meaning a full reconciliation of funds on a loan by loan basis, and verification that the legal agreements underlying the loans are valid, enforceable and directly between borrower and lender - then lenders cannot determine whether or not they are creditors of the Group. Hopefully, this will be done in a fairly rapid fashion after the legal matters have concluded.
|
|
mason
Member of DD Central
Posts: 666
Likes: 641
|
Post by mason on Apr 13, 2018 11:43:07 GMT
I concur with pikestaff assessment & furthermore, whilst the latest 12/4/18 letter does appear to use rather sloppy language regarding creditors as opposed to lenders that could well be resultant of the court ruling restrictions. I do however believe that from an administration viewpoint it could be explained due to the structure of the collateral loanbook; All the loans are specific, independent, stand alone entities, that are then secured against a SPECIFIC ASSET, whether bling, vehicle, property whatever.
Collateral (acting as agent for the lender) then takes in some cases physical possession or at least a charge against the title of that borrowers specific related asset & holds them in trust on behalf of lenders. So effectively becoming assets, albeit secured & directly relating to specific lenders/loanholders, on the Collateral balance sheet, so it could easily be inferred that lenders were indeed secured creditors on that basis. I would personally prefer the term lender as the contract was directly between lenders & borrowers, with Collateral being limited to the agent & enabling intermediary, albeit also acting as secure repository for the asset or charge secured against the title of that asset.
Until the FCA inspired court action is resolved, hopefully at the end of this month, communication will by necessity be limited & only add to the confusion. This is certainly the way we were led to believe things were structured. If it is indeed the case, then we would presumably become creditors of the Security Trustee (or the Collateral Agent for chattels assets) if a loan was put in recovery, but not before. The restrictions placed on the Group by the FCA has muddied the waters, since the Group cannot meet its obligations to us, but there is no indication that any of the underlying loans are not being serviced.
|
|
