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Post by brightspark on Aug 1, 2019 12:05:26 GMT
Although this is Lendy-speak with the benefit of hindsight everyone knows it to be - well Lendy-speak. Unfortunately out there in the economic jungle there are plenty of others advertising their products and services using similar patters. How does the small investor find their way to the end of the rainbow? I suppose using an FCA registered company is an obvious starting place.
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Post by samford71 on Aug 1, 2019 19:19:06 GMT
What gets me as well is why SS were given Interim Permission in the first place. At the time (April 2014), I was investing with FC who, like the other big players, had already been in business for up to 9/10 years. Thus they were well-established in the P2P game when the industry began to be regulated (as an aside, why did this take so long?). However, SS were only just starting out, with their first property loan PBL001 being repaid in December 2014 (I can't see the start date). As they were not P2P until much later, and in fact marketed themselves as a savings product, shouldn't they have been subject to financial regulations from the start? FC and RS were founded in 2010. Zopa started in 2005. These platforms, and others than joined them, were all originally regulated by the OFT. The existing platforms lobbied the government to put them under FCA supervision for the rather obvious reason that it would give them an air of credibility that they clearly lacked. This, however, would create a risk for existing platforms since none of them could meet even the most basic threshhold conditions that most financial services companies under FCA supervision had to meet. The big risk was that new platforms would appear who could meet these FCA regs and take their market share. So the existing platforms lobbied again to obtain "interim permission" so as to negate that risk. Every platform that existed at that point in 2014 was simply grandfathered into the FCA interim permission. This included SS/Lendy who were founded in 2013. Frankly, you could have been running a P2P platform from a shed in the back of your garden with the pet budgie as your risk management officer and you still would have got interim permisson. This was the fundamental error.
To be fair, the FCA started to row back almost immediately once they started to take a look at the existing P2P platforms. Many of these platforms were simply totally out of their depth. So rather than the usual 3 to 6 month FCA approval process, many platforms took well over a year to gain approval. Getting FCA approval really isn't that hard. I've been through the process of getting two investment managers through the process and it's fairly straightforward. You just need to attest that you can meet the necessary conditions, show some level of documentation around that and answer their questions intelligently. It's not a forensic examination of your account or operational structure. The FCA simply doesn't have the bodies to do that. It's also worth noting that by mid 2018, the FCA had received over 370 applications by potential P2P platforms. About 80% of those applications were withdrawn, rather than rejected, simply because platforms often couldn't meet the threshhold conditons. So the FCA full permission process probably has weeded out many potential weak platforms.
But by that point all those platforms that received interim permission had already printed billions in loans ...
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Greenwood2
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Post by Greenwood2 on Aug 1, 2019 20:09:17 GMT
But what could the FCA do with many platforms already trading? Stop them all trading immediately and strand many lenders in non trading platforms. The idea of interim permission to allow these platforms (some with thousands of lenders) to continue trading was really the only option. Or close them all down and say apply for permission and in x years time you can start trading again and what happens to lender funds and borrower loans in the meantime?
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brianlom1
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Post by brianlom1 on Aug 1, 2019 23:04:04 GMT
But what could the FCA do with many platforms already trading? Stop them all trading immediately and strand many lenders in non trading platforms. The idea of interim permission to allow these platforms (some with thousands of lenders) to continue trading was really the only option. Or close them all down and say apply for permission and in x years time you can start trading again and what happens to lender funds and borrower loans in the meantime? I guess this begs the question - why were the FCA not prepared to grant interim permission to CollateralUK? They were already trading but it didn't prevent the FCA from closing them down.
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ilmoro
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Post by ilmoro on Aug 1, 2019 23:41:15 GMT
But what could the FCA do with many platforms already trading? Stop them all trading immediately and strand many lenders in non trading platforms. The idea of interim permission to allow these platforms (some with thousands of lenders) to continue trading was really the only option. Or close them all down and say apply for permission and in x years time you can start trading again and what happens to lender funds and borrower loans in the meantime? I guess this begs the question - why were the FCA not prepared to grant interim permission to CollateralUK? They were already trading but it didn't prevent the FCA from closing them down. Interim permission was only granted to firms trading prior to April 14. Collateral weren't so needed to apply for full permission at the outset. Firms with interim permission, which Collateral appeared to have, were only allowed to trade providing they had a current full permission application under way. When Collateral withdrew theirs, the FCA shut them down. Those are the facts as presented but the real truth has yet to fully materialise.
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garfield
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Post by garfield on Aug 2, 2019 7:31:37 GMT
Interim permission was only granted to firms trading prior to April 14. Collateral weren't so needed to apply for full permission at the outset. Firms with interim permission, which Collateral appeared to have, were only allowed to trade providing they had a current full permission application under way. When Collateral withdrew theirs, the FCA shut them down. Those are the facts as presented but the real truth has yet to fully materialise. But, from the letter from the FCA to Lord Myners (in respect of Lendy), "The firm made an application to become fully authorised on 30 March 2016." (I think this was some kind of a deadline) Thus they continued trading for two full years without having submitted an application.
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ilmoro
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Post by ilmoro on Aug 2, 2019 7:48:46 GMT
Interim permission was only granted to firms trading prior to April 14. Collateral weren't so needed to apply for full permission at the outset. Firms with interim permission, which Collateral appeared to have, were only allowed to trade providing they had a current full permission application under way. When Collateral withdrew theirs, the FCA shut them down. Those are the facts as presented but the real truth has yet to fully materialise. But, from the letter from the FCA to Lord Myners (in respect of Lendy), "The firm made an application to become fully authorised on 30 March 2016." (I think this was some kind of a deadline) Thus they continued trading for two full years without having submitted an application. Technically yes but they were in the application process. When the FCA took over regulation, all existing IP has to apply to have it renewed. The FCA set up a system of application windows to manage the process, with each platform seeking full permission allocated an application window which was their deadline to file the full application. Lendy was H1 16, the last window AIUI.
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garfield
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Post by garfield on Aug 2, 2019 9:55:11 GMT
Some slightly dodgy maths, but I get the picture...
"Some 50,000 businesses were involved in consumer credit activities at the time the FCA took over the regulation of consumer credit from the Office of Fair Trading (OFT) in April 2014," ... "Prior to that, the FCA was responsible for regulating 27,000 firms, so the number of companies that were potentially subject to its regulation nearly tripled overnight."
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Monetus
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Post by Monetus on Aug 2, 2019 10:45:26 GMT
Some slightly dodgy maths, but I get the picture...
"Some 50,000 businesses were involved in consumer credit activities at the time the FCA took over the regulation of consumer credit from the Office of Fair Trading (OFT) in April 2014," ... "Prior to that, the FCA was responsible for regulating 27,000 firms, so the number of companies that were potentially subject to its regulation nearly tripled overnight."
Yes in many ways the FCA are the fall guys in this situation as they almost certainly lacked the resources to monitor this many new firms properly. The FCA's role is solely to enforce government policy so the decision that it would be wise to regulate P2P under interim/consumer credit was made by someone higher up. Presumably during the coalition government and George Osbourne era if anyone here can remember? I remember there was a huge push for “Fintech” during that period and it would appear whilst striving for technological innovation the policymakers thought technology was a end in itself, and paid little attention to the fact that the fin(ance) part developed over 300 years with numerous errors and fraud during that period. For some reason they put little or no requirements on qualifications, competency or experience for the P2P sector. Brooke and Gordon were no better than the man/woman you met down the pub who knew how you "could make a few bob" (usually involving the next race at Sandown Park). They told you, without any basis for making the statement, you could receive a secure income of 12% secured on property with professionals, who incidentally had completed few if any of their previous projects. Leaving out the fact that this secure monthly income was actually a return of your own capital and they would take about half as much as you and everyone else at no risk to themselves. And the government thought it appropriate to allow such solicitation because it was innovative and utilised technology without any checks or vetting on the persons who offered these "investments", incidentally marketed as "Savings" as the name of the platform itself suggested. Brooke and Gordon may have known a lot about IT and marine boats, but they had no idea about the realities of the financial world. Why should they have been allowed to raise and then speculate with nearly half a billion pounds of retail investors money? The fact the platform allegedly didn't seem to conduct proper KYC/AML checks exposes just how “light touch” the regulation really was. You’d never see this at a bank or investment fund and if this was a challenger bank like Monzo/Starling or another area of financial services there would be detailed requirements for qualifications, relevant experience, "fit and proper person tests" etc. However as regulation of the P2P sector was so “light touch” it allowed completely unethical and inexperienced people to roam free with hundreds of millions of pounds of other people’s money with barely any oversight whatsoever for several years. Highly inappropriate if you ask me (and obviously speaking with the benefit of hindsight of course). The FCA is culpable in not requiring one of the largest platforms to undertake scrutiny to virtually the last possible moment, but the policymakers in Government allowed the whole farce to occur in the first place.
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Post by empyrean on Aug 2, 2019 12:18:22 GMT
Some slightly dodgy maths, but I get the picture...
"Some 50,000 businesses were involved in consumer credit activities at the time the FCA took over the regulation of consumer credit from the Office of Fair Trading (OFT) in April 2014," ... "Prior to that, the FCA was responsible for regulating 27,000 firms, so the number of companies that were potentially subject to its regulation nearly tripled overnight."
Yes in many ways the FCA are the fall guys in this situation as they almost certainly lacked the resources to monitor this many new firms properly. The FCA's role is solely to enforce government policy so the decision that it would be wise to regulate P2P under interim/consumer credit was made by someone higher up. Presumably during the coalition government and George Osbourne era if anyone here can remember? I remember there was a huge push for “Fintech” during that period and it would appear whilst striving for technological innovation the policymakers thought technology was a end in itself, and paid little attention to the fact that the fin(ance) part developed over 300 years with numerous errors and fraud during that period. For some reason they put little or no requirements on qualifications, competency or experience for the P2P sector. Brooke and Gordon were no better than the man/woman you met down the pub who knew how you "could make a few bob" (usually involving the next race at Sandown Park). They told you, without any basis for making the statement, you could receive a secure income of 12% secured on property with professionals, who incidentally had completed few if any of their previous projects. Leaving out the fact that this secure monthly income was actually a return of your own capital and they would take about half as much as you and everyone else at no risk to themselves. And the government thought it appropriate to allow such solicitation because it was innovative and utilised technology without any checks or vetting on the persons who offered these "investments", incidentally marketed as "Savings" as the name of the platform itself suggested. Brooke and Gordon may have known a lot about IT and marine boats, but they had no idea about the realities of the financial world. Why should they have been allowed to raise and then speculate with nearly half a billion pounds of retail investors money? The fact the platform allegedly didn't seem to conduct proper KYC/AML checks exposes just how “light touch” the regulation really was. You’d never see this at a bank or investment fund and if this was a challenger bank like Monzo/Starling or another area of financial services there would be detailed requirements for qualifications, relevant experience, "fit and proper person tests" etc. However as regulation of the P2P sector was so “light touch” it allowed completely unethical and inexperienced people to roam free with hundreds of millions of pounds of other people’s money with barely any oversight whatsoever for several years. Highly inappropriate if you ask me (and obviously speaking with the benefit of hindsight of course). The FCA is culpable in not requiring one of the largest platforms to undertake scrutiny to virtually the last possible moment, but the policymakers in Government allowed the whole farce to occur in the first place. This is the best summary I've come across of what's happened with Lendy. I've been feeling particularly ashamed with myself over not seeing through the sham that, as your post states, the 'interest on account' was actually our own money.
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ilmoro
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Post by ilmoro on Aug 2, 2019 12:59:18 GMT
Yes in many ways the FCA are the fall guys in this situation as they almost certainly lacked the resources to monitor this many new firms properly. The FCA's role is solely to enforce government policy so the decision that it would be wise to regulate P2P under interim/consumer credit was made by someone higher up. Presumably during the coalition government and George Osbourne era if anyone here can remember? I remember there was a huge push for “Fintech” during that period and it would appear whilst striving for technological innovation the policymakers thought technology was a end in itself, and paid little attention to the fact that the fin(ance) part developed over 300 years with numerous errors and fraud during that period. For some reason they put little or no requirements on qualifications, competency or experience for the P2P sector. Brooke and Gordon were no better than the man/woman you met down the pub who knew how you "could make a few bob" (usually involving the next race at Sandown Park). They told you, without any basis for making the statement, you could receive a secure income of 12% secured on property with professionals, who incidentally had completed few if any of their previous projects. Leaving out the fact that this secure monthly income was actually a return of your own capital and they would take about half as much as you and everyone else at no risk to themselves. And the government thought it appropriate to allow such solicitation because it was innovative and utilised technology without any checks or vetting on the persons who offered these "investments", incidentally marketed as "Savings" as the name of the platform itself suggested. Brooke and Gordon may have known a lot about IT and marine boats, but they had no idea about the realities of the financial world. Why should they have been allowed to raise and then speculate with nearly half a billion pounds of retail investors money? The fact the platform allegedly didn't seem to conduct proper KYC/AML checks exposes just how “light touch” the regulation really was. You’d never see this at a bank or investment fund and if this was a challenger bank like Monzo/Starling or another area of financial services there would be detailed requirements for qualifications, relevant experience, "fit and proper person tests" etc. However as regulation of the P2P sector was so “light touch” it allowed completely unethical and inexperienced people to roam free with hundreds of millions of pounds of other people’s money with barely any oversight whatsoever for several years. Highly inappropriate if you ask me (and obviously speaking with the benefit of hindsight of course). The FCA is culpable in not requiring one of the largest platforms to undertake scrutiny to virtually the last possible moment, but the policymakers in Government allowed the whole farce to occur in the first place. This is the best summary I've come across of what's happened with Lendy. I've been feeling particularly ashamed with myself over not seeing through the sham that, as your post states, the 'interest on account' was actually our own money. Just in case you havent noticed, AC also pay interest from retained funds on development loans. Im pretty sure its fairly standard practice as developers generally wont have the cash flow to pay interest during the build. The alternative is to roll up the interest & pay it at the end like Crowdproperty or FS.
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Post by dl292 on Aug 2, 2019 13:09:56 GMT
Some slightly dodgy maths, but I get the picture...
"Some 50,000 businesses were involved in consumer credit activities at the time the FCA took over the regulation of consumer credit from the Office of Fair Trading (OFT) in April 2014," ... "Prior to that, the FCA was responsible for regulating 27,000 firms, so the number of companies that were potentially subject to its regulation nearly tripled overnight."
Yes in many ways the FCA are the fall guys in this situation as they almost certainly lacked the resources to monitor this many new firms properly. The FCA's role is solely to enforce government policy so the decision that it would be wise to regulate P2P under interim/consumer credit was made by someone higher up. Presumably during the coalition government and George Osbourne era if anyone here can remember? I remember there was a huge push for “Fintech” during that period and it would appear whilst striving for technological innovation the policymakers thought technology was a end in itself, and paid little attention to the fact that the fin(ance) part developed over 300 years with numerous errors and fraud during that period. For some reason they put little or no requirements on qualifications, competency or experience for the P2P sector. Brooke and Gordon were no better than the man/woman you met down the pub who knew how you "could make a few bob" (usually involving the next race at Sandown Park). They told you, without any basis for making the statement, you could receive a secure income of 12% secured on property with professionals, who incidentally had completed few if any of their previous projects. Leaving out the fact that this secure monthly income was actually a return of your own capital and they would take about half as much as you and everyone else at no risk to themselves. And the government thought it appropriate to allow such solicitation because it was innovative and utilised technology without any checks or vetting on the persons who offered these "investments", incidentally marketed as "Savings" as the name of the platform itself suggested. Brooke and Gordon may have known a lot about IT and marine boats, but they had no idea about the realities of the financial world. Why should they have been allowed to raise and then speculate with nearly half a billion pounds of retail investors money? The fact the platform allegedly didn't seem to conduct proper KYC/AML checks exposes just how “light touch” the regulation really was. You’d never see this at a bank or investment fund and if this was a challenger bank like Monzo/Starling or another area of financial services there would be detailed requirements for qualifications, relevant experience, "fit and proper person tests" etc. However as regulation of the P2P sector was so “light touch” it allowed completely unethical and inexperienced people to roam free with hundreds of millions of pounds of other people’s money with barely any oversight whatsoever for several years. Highly inappropriate if you ask me (and obviously speaking with the benefit of hindsight of course). The FCA is culpable in not requiring one of the largest platforms to undertake scrutiny to virtually the last possible moment, but the policymakers in Government allowed the whole farce to occur in the first place. Wow - I bet that was cathartic to get off your chest Monetus !  It was certainly weirdly cathartic for me reading it. I knew there was risk with P2P, but I didnt expect everything thats only now coming to light. My reading of this sorry mess is the FCA proactively lost me a lot of money, (aswell as the Collateral farce!!!). You - and the other LAG founders and conrtibuting LAG members - have my upmost resepect.
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Post by mattygroves on Aug 2, 2019 16:01:30 GMT
Surely you can’t blame all of this on the FCA failing to effectively regulate an innovative niche financial area ? There has to be an element of personal responsibility here - 12% returns aren’t ever going to be risk free or even moderately risk free. Given the outcry that appears on this forum when one of the platforms tries to introduce extra security or asks people to verify what type of investor they are I can see why regulation is hard.
in hindsight I think self select P2P should have been limited to HNW or sophisticated investors from the start - it is a complex area and the FCA suggestion of it being less than 10% of liquid wealth seems sensible to me. However, the majority on this forum seem to think applying limits is not acceptable -you can’t have it both ways.
i’ve been In P2P since the early days of Zopa but only ventured into self select in 2015 or 2016. At that point it was clear to me that Lendy wasn’t a strong platform and it represented more risk than I was willing to accept. So I chose Moneything instead and although I’ve got a number of defaults I was expecting to have some and also to have no where near full capital recovery - The results so far have been better than I expected. I’ve also managed to avoid COL but that was probably more luck than judgement.
The FCA can’t really be blamed for the fact that people got greedy and didn’t bother to read all the loan information and realise that “your capital is at risk” may actually mean a 100% capital loss even with a charge on an asset. Yes that warning should probably have been clearer on the early Lendy website but people also need to read everything and do their own research particularly if they can’t afford to lose what they are investing.
i hope those of you with Lendy get a reasonable outcome but would hate that to be at the expense of taxpayers.
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Post by empyrean on Aug 2, 2019 16:04:23 GMT
This is the best summary I've come across of what's happened with Lendy. I've been feeling particularly ashamed with myself over not seeing through the sham that, as your post states, the 'interest on account' was actually our own money. Just in case you havent noticed, AC also pay interest from retained funds on development loans. Im pretty sure its fairly standard practice as developers generally wont have the cash flow to pay interest during the build. The alternative is to roll up the interest & pay it at the end like Crowdproperty or FS. I hadn’t noticed that, so thank you for providing some context, although this doesn’t change my opinion that practice is a sham. I’m sure it was obvious to many from the outset, but as I said, I naively did not, and am none too happy about myself because of it.
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Monetus
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Post by Monetus on Aug 2, 2019 19:50:23 GMT
Surely you can’t blame all of this on the FCA failing to effectively regulate an innovative niche financial area ? There has to be an element of personal responsibility here - 12% returns aren’t ever going to be risk free or even moderately risk free. Given the outcry that appears on this forum when one of the platforms tries to introduce extra security or asks people to verify what type of investor they are I can see why regulation is hard. in hindsight I think self select P2P should have been limited to HNW or sophisticated investors from the start - it is a complex area and the FCA suggestion of it being less than 10% of liquid wealth seems sensible to me. However, the majority on this forum seem to think applying limits is not acceptable -you can’t have it both ways. i’ve been In P2P since the early days of Zopa but only ventured into self select in 2015 or 2016. At that point it was clear to me that Lendy wasn’t a strong platform and it represented more risk than I was willing to accept. So I chose Moneything instead and although I’ve got a number of defaults I was expecting to have some and also to have no where near full capital recovery - The results so far have been better than I expected. I’ve also managed to avoid COL but that was probably more luck than judgement. The FCA can’t really be blamed for the fact that people got greedy and didn’t bother to read all the loan information and realise that “your capital is at risk” may actually mean a 100% capital loss even with a charge on an asset. Yes that warning should probably have been clearer on the early Lendy website but people also need to read everything and do their own research particularly if they can’t afford to lose what they are investing. i hope those of you with Lendy get a reasonable outcome but would hate that to be at the expense of taxpayers. Nope as stated I actually don't really blame The FCA that much at all. After all they were just following orders. They are also just enforcers of wider governmental policy. I am glad that your investments have worked out well thus far and I hope that continues. Totally agree that self-select P2P should have been limited to HNW/sophisticated from the very start and that's the very point I am trying to make actually. Very few people are equipped with the skills or knowledge to adequately assess the risk of speculative property developments so it's best left to the professionals (which sadly many P2P platform operators weren't). In hindsight it's not a place for the average retail investor and having spoken with hundreds of Lendy investors over the past couple of months I can safely say that very few knew exactly what they were investing in (members of this forum excluded). Also totally agree that personal responsibility is important and that investors need to accept responsibility for their own actions - nobody certainly put a gun to my head to invest and I fully accept that I was both naive and greedy. I'm actually one of the "lucky" ones in that I haven't overextended (as painful as it is to see a large portion of the money you've worked hard for over the past decade disappear into thin air). However many others who were lured in by Lendy's marketing and false promises sadly aren't as fortunate. We've received some pretty horrific stories from investors including several who are suicidal. I've spoken with one investor for example who was encouraged to invest £750k of his father's care home fees into Lendy Wealth in April 2019 following a personal meeting with Liam when the platform was already on its last legs and he now can't pay for his father's care. This wasn't because his P2P investment performed poorly, but because he was taken for a ride by a nefarious platform operator. Most people on this forum are relatively clued up and know P2P works/how to do DD etc but that's not the reality for a large number of investors who've perhaps never visited a P2P forum and assumed they were investing in a type of "savings" product that was secured on property based on the way it was marketed to them. The fact that a significant amount of P2P losses are likely going to be caused by negligence, poor business practices and perhaps even outright fraud on behalf of the platform operators rather than the performance of the P2P loans themselves tells me something is very wrong with this industry. Platform risk was something that was massively under-stated in my eyes and my main issue from a regulatory perspective is that an environment has been fostered were a limited number of shady platform operators have seemingly been allowed to get away with murder. Perhaps the FCA should have had just refused to regulate the P2P industry entirely in the first place and truly make it "buyer beware" like they've just done with another speculative investment - cryptocurrency? www.altfi.com/article/5606_fca-will-not-regulate-bitcoin There is no need to worry regarding taxpayer cash. The FCA (and FSCS for that matter) aren't funded by taxpayers but by levies and fees charged to firms in the financial services industry meaning they are effectively funded by the very companies they are meant to be protecting consumers from.
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It was certainly weirdly cathartic for me reading it. I knew there was risk with P2P, but I didnt expect everything thats only now coming to light. My reading of this sorry mess is the FCA proactively lost me a lot of money, (aswell as the Collateral farce!!!). You - and the other LAG founders and conrtibuting LAG members - have my upmost resepect.