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Post by jessicaking on Mar 25, 2019 12:13:53 GMT
Thousands of people who invested in a high-risk bond scheme marketed as a "Fixed Rate ISA" fear they have lost everything after the company collapsed.www.bbc.co.uk/news/uk-england-47454328Many similarities to some stories here. high rates, “asset backed security”, “bonds”, three rates, looks like a building society ISA, FCA authorisation misused, FCA clueless, no one has lost a penny, etc. Yes, this is awful, that`s why I prefer to diversify my investment with several projects at once, like in the property crowdfunding model. More security for me there.
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zlb
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Post by zlb on Mar 25, 2019 14:24:28 GMT
I think there was a mention on R4 moneybox, at programme introduction, I'm sure they said four people been arrested from lc&f. I didn't hear the feature part of the programme.
I definitely came across lc&f when investigating investment accounts online.
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reinvestor
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Post by reinvestor on Mar 26, 2019 19:49:14 GMT
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benaj
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Post by benaj on Mar 26, 2019 20:52:19 GMT
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zlb
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Post by zlb on Mar 27, 2019 16:58:08 GMT
So what were the underlying investments, that made it crash? Few p2p offer >8%
What's the difference?
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benaj
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Post by benaj on Mar 27, 2019 17:39:02 GMT
So what were the underlying investments, that made it crash? Few p2p offer >8% What's the difference? The buck stops when FCA ordered LC&F not to advertise those bonds, no more new money for LC&F. According to this article, one of those investment is loan lent to dormant company bondreview.co.uk/2019/02/06/london-capital-finance-is-smith-williamsons-softly-softly-approach-in-the-interests-of-investors/To me, there is no difference between lending money on FC which borrowers can't make the first repayment and go bust and lending money to a dormant company. At least FC gives investor for a more diversified portfolio, LC&F only has a limited number of borrowers / investment.
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Post by mrclondon on Mar 27, 2019 17:54:22 GMT
According to this article, one of those investment is loan lent to dormant company If 'dormant company' is taken to mean that the borrowing company files at CH declaring dormant company accounts for year ends after it has drawn down a loan, then there are plenty of p2p loans to dormant companies. The difference is that on self-select p2p platforms investors have a choice as to whether to (continue to) lend to such companies, whereas with LCF and p2p black-box accounts they don't.
A few examples: FS: R*** St Widnes, Len***** Edinburgh, Rishton, land in East Lancs, St Helens Nursery,
L: DFL008^, DFL021 COL: BL00010^
^ = repaid.
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zlb
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Post by zlb on Mar 28, 2019 10:23:27 GMT
Thanks benaj and mrclondon. So a dormant company can take out such a loan from an FCA approved P2P platform, when the dormant company has no intention of using it for their business ... Or is it that they are registering as dormant once they have the loan? Is it known why the FCA barred them from further activity? Did someone complain, or where they being monitored? This raises the question, for me, how much interest do the FCA take in individual loans of new platforms where it's often pointed out, there isn't enough diversity. |
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pikestaff
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Post by pikestaff on Mar 28, 2019 18:27:03 GMT
According to this article, one of those investment is loan lent to dormant company If 'dormant company' is taken to mean that the borrowing company files at CH declaring dormant company accounts for year ends after it has drawn down a loan, then there are plenty of p2p loans to dormant companies. [...]
A few examples: FS: R*** St Widnes, Len***** Edinburgh, Rishton, land in East Lancs, St Helens Nursery,
L: DFL008^, DFL021 COL: BL00010^
^ = repaid.
Hmmm. A dormant company is defined in s1169 of the Companies Act 2006 as one which has no significant accounting transactions (meaning transactions required to be entered in the company's accounting records under section 386 of the Act). Taking out a loan would need to be entered in the accounting records. So would the payment or accrual of interest thereafter, as would any repayment. So whilst it's perfectly possible to make a loan to a company that was previously dormant (I'm sure it happens all the time, especially if the loan is to a company established for a single project), the company will cease to be dormant once the loan is made.
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Post by mrclondon on Mar 28, 2019 19:37:59 GMT
If 'dormant company' is taken to mean that the borrowing company files at CH declaring dormant company accounts for year ends after it has drawn down a loan, then there are plenty of p2p loans to dormant companies. [...]
A few examples: FS: R*** St Widnes, Len***** Edinburgh, Rishton, land in East Lancs, St Helens Nursery,
L: DFL008^, DFL021 COL: BL00010^
^ = repaid.
Hmmm. A dormant company is defined in s1169 of the Companies Act 2006 as one which has no significant accounting transactions (meaning transactions required to be entered in the company's accounting records under section 386 of the Act). Taking out a loan would need to be entered in the accounting records. So would the payment or accrual of interest thereafter, as would any repayment. So whilst it's perfectly possible to make a loan to a company that was previously dormant (I'm sure it happens all the time, especially if the loan is to a company established for a single project), the company will cease to be dormant once the loan is made. Yes thats my understanding too, but there is one aspect that remains unclear - my suspicision is that in most of these cases the borrowing company against which the charges are noted (CH + LR) are as you say SPV's but they do not have any bank acccount, and do not receive the loan money, this is sent to some other bank account in another group company (or direct to a director's personal bank account) by the borrower's solicitors on receipt from the platform's solicitors. I contend that the SPV should be recording the loan in its accounts even though it has never received any cash in its own name, and creating a corresponding debtor of whoever has actually received the money.
In practical terms though I've now realised that you can file any old rubbish as accounts at CH and nothing can be done about it. Probably 40% of accounts filed by p2p borrowers contain obvious inaccuracies with the level of creditors for example being significantly lower than the p2p loan balance at that year end date, or the asset values are manipulated to ensure bottom line shareholder funds exactly match the paid up share capital.
The risk of lending to borrowers filing incorrect or dormant accounts seems to mainly fall onto the ease with which the borrower can refinance the loan at the end of the term. p2p lenders (esp. retail lenders chasing the 12/13% yields) may not care about such matters, but I've been assured by everyone I've discussed this with that mainstream credit providers would regard such practises as an automatic bar to credit. (And I take the same view and will attempt to sell such loans on SMs once I'm aware of such practices)
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corto
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Post by corto on Mar 29, 2019 7:38:50 GMT
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Monetus
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Post by Monetus on Mar 30, 2019 22:34:38 GMT
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arby
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Post by arby on Mar 31, 2019 8:31:52 GMT
"Investors may not get compensation from the FSCS" Did anyone think they would? The screenshot the BBC use in the article even includes the statement that the capital is at risk and returns are not guaranteed. While I don't want any investor to be scammed, as seems to be the case, the FSCS simply isn't applicable here. However, as it seems earlier opportunities for the regulator to step in were missed, I could see how compensation provided through another channel could be an answer.
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registerme
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Post by registerme on Apr 1, 2019 17:58:14 GMT
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jlend
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Post by jlend on Apr 1, 2019 19:38:13 GMT
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