Greenwood2
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Post by Greenwood2 on Aug 2, 2019 20:13:00 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 can afford to lose what I've invested in Collateral and Lendy (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 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 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. I'm starting to wonder if FCA should have had just refused to regulate the P2P industry 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-bitcoinThere 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. All ends up with the tax payer eventually though, that's who these companies get their funds from.
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Monetus
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Post by Monetus on Aug 2, 2019 21:24:55 GMT
Well on that note as a taxpayer I sure wish I had a say in the government spending £2.1bn on No Deal Brexit preparations yesterday for something I am totally against. An interesting few months ahead...
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Post by wotnot on Aug 2, 2019 21:33:59 GMT
All ends up with the tax payer eventually though, that's who these companies get their funds from. The financial services industry is overwhelmingly private sector. The companies in question get their funds primarily from their customers/investors, not the tax paying public. Plenty of overlap between the two, but not the same thing.
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sl75
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Post by sl75 on Aug 2, 2019 21:39:34 GMT
... 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. It seems to me that person has been harmed more (in the short term) by RSM's actions of refusing all investors access to their legitimately-held funds for several months than by Lendy themselves.
Why on earth, for example, couldn't they simply pay Wealth investors an amount equivalent to the monthly "interest" they would otherwise have received for as long as the monies held on account by the Wealth account remain sufficient to do so?
Similarly, for "normal" investors, it is RSM who are denying us access to funds held in the client account, which Lendy would happily have forwarded/returned to us months ago.
Will they come up with another excuse to avoid paying us our legitimately-held funds even when 1 October arrives?
I get that the RECOVERY process is expected to take several months/years, which was fully expected and planned for, but forwarding to the rightful owners the undisputed monies already held on account is supposed to be the simple part, and should have been completed in a matter of days or weeks.
The short-term financial hardship has been caused entirely by RSM's actions and not by Lendy's. It is the long-term losses for which Lendy will be ultimately responsible...
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Monetus
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Post by Monetus on Aug 2, 2019 21:49:54 GMT
... 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. It seems to me that person has been harmed more (in the short term) by RSM's actions of refusing all investors access to their legitimately-held funds for several months than by Lendy themselves.
Why on earth, for example, couldn't they simply pay Wealth investors an amount equivalent to the monthly "interest" they would otherwise have received for as long as the monies held on account by the Wealth account remain sufficient to do so?
Similarly, for "normal" investors, it is RSM who are denying us access to funds held in the client account, which Lendy would happily have forwarded/returned to us months ago.
Will they come up with another excuse to avoid paying us our legitimately-held funds even when 1 October arrives?
I get that the RECOVERY process is expected to take several months/years, which was fully expected and planned for, but forwarding to the rightful owners the undisputed monies already held on account is supposed to be the simple part, and should have been completed in a matter of days or weeks.
The short-term financial hardship has been caused entirely by RSM's actions and not by Lendy's. It is the long-term losses for which Lendy will be ultimately responsible...
Lendy Wealth investors will be treated exactly the same as self-select investors in the administration. They won't have any quick access to funds and will be repaid as their loans repay just like normal investors. Lendy Wealth was just a "black box" solution that allowed Lendy to choose individual loans on behalf of investors but they are still secured creditors of SSSH holding individual loan parts. RSM aren't intentionally denying you access to your funds. The delay is due to the fact that Lendy's KYC/AML regime was so poor they're having to re-do it again for all investors with a third-party firm as part of their regulatory requirements before they are able to release any money. Lendy's shoddy operating practices are the reason investors can't access their funds yet.
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Post by billy169 on Aug 2, 2019 22:26:05 GMT
Shoddy practices given a green light by FCA.,,that point will not go away.
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sl75
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Post by sl75 on Aug 2, 2019 22:30:40 GMT
Lendy Wealth investors will be treated exactly the same as self-select investors in the administration. They won't have any quick access to funds and will be repaid as their loans repay just like normal investors. Lendy Wealth was just a "black box" solution that allowed Lendy to choose individual loans on behalf of investors but they are still secured creditors of SSSH holding individual loan parts. RSM aren't intentionally denying you access to your funds. The delay is due to the fact that Lendy's KYC/AML regime was so poor they're having to re-do it again for all investors with a third-party firm as part of their regulatory requirements before they are able to release any money. Lendy's shoddy operating practices are the reason investors can't access their funds yet. Indeed - "Wealth" investors are being treated equally, as they're also being denied access to the funds that are legitimately held "on account" (which I understand Lendy had previously been releasing in the form of "interest" payments).
RSM could have gone further and released to "Wealth" investors not only the "interest", but also all the monies held on account on behalf of "Wealth" clients, but instead they've chosen to deny access even to the amount that Lendy had been reliably paying to those customers every month.
When I sign up with a brand new service that had no prior information about me, they're able to perform all the necessary KYC/AML checks within a day; it's up to me how "slow" I make that by how quickly I forward scans/certified copies of the relevant documents. There is no reason that RSM with all their access to people with relevant experience couldn't quickly set up a system to do so too if they wanted to; the delays so far and especially the further delay until 1 October seem entirely of their making.
I recognise that RSM have stated that anyone who is experiencing "financial hardship" as a result of RSM's actions of denying them access to their funds can use some expedited process of which I have no further knowledge, but really they should have set up a system that allows EVERYONE to have completed whatever additional checks they considered necessary by now, and my funds would already be in my bank account and able to be used to pay some large and previously unexpected bills that are due shortly (not "hardship" just a PITA to have to liquidate other assets whilst knowing that I already have liquid funds held in my name in a place to which I'm being denied access).
Edit: The example you previously gave of someone who'd put £750k into Lendy, expecting to get a monthly payment that would easily cover their father's care seems a perfect example of this... whilst I don't have the numbers to calculate exactly what a £750k investor's "fair" share of the cash held on account on behalf of "Wealth" investors would be, I'd bet it would cover several month's care home fees... there was a perfectly reasonable expectation when RSM took over that they would be sufficiently competent to reconcile the accounts and put a system in place to allow customers to adequately identify themselves within at most a few weeks. Whilst they can certainly blame Lendy for a lot, I don't see that they can blame Lendy for their own failures in this area.
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Post by default on Aug 3, 2019 4:25:55 GMT
something that i feel will never be truly understood by most people here is how lendy deliberately painted a picture of risk free investment. many people were taken in by that, including me. i doubt anyone truly understood how bad things were until it was too late. and even now there are things that are coming out that are shocking.
it is the fact that lendy could effectively prey on naive people that is so sickening. and whether it was the government or the FCA that allowed this, it nevertheless happened. if there is to be a P2P industry, it needs to be regulated in a way that actually protects people from being conned. that hasn't happened and still isn't happening.
if you can walk away from this with your life intact, you are lucky. i won't.
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djay
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Post by djay on Aug 3, 2019 8:04:18 GMT
Lendy Wealth investors will be treated exactly the same as self-select investors in the administration. They won't have any quick access to funds and will be repaid as their loans repay just like normal investors. Lendy Wealth was just a "black box" solution that allowed Lendy to choose individual loans on behalf of investors but they are still secured creditors of SSSH holding individual loan parts. RSM aren't intentionally denying you access to your funds. The delay is due to the fact that Lendy's KYC/AML regime was so poor they're having to re-do it again for all investors with a third-party firm as part of their regulatory requirements before they are able to release any money. Lendy's shoddy operating practices are the reason investors can't access their funds yet. Indeed - "Wealth" investors are being treated equally, as they're also being denied access to the funds that are legitimately held "on account" (which I understand Lendy had previously been releasing in the form of "interest" payments).
RSM could have gone further and released to "Wealth" investors not only the "interest", but also all the monies held on account on behalf of "Wealth" clients, but instead they've chosen to deny access even to the amount that Lendy had been reliably paying to those customers every month.
When I sign up with a brand new service that had no prior information about me, they're able to perform all the necessary KYC/AML checks within a day; it's up to me how "slow" I make that by how quickly I forward scans/certified copies of the relevant documents. There is no reason that RSM with all their access to people with relevant experience couldn't quickly set up a system to do so too if they wanted to; the delays so far and especially the further delay until 1 October seem entirely of their making.
I recognise that RSM have stated that anyone who is experiencing "financial hardship" as a result of RSM's actions of denying them access to their funds can use some expedited process of which I have no further knowledge, but really they should have set up a system that allows EVERYONE to have completed whatever additional checks they considered necessary by now, and my funds would already be in my bank account and able to be used to pay some large and previously unexpected bills that are due shortly (not "hardship" just a PITA to have to liquidate other assets whilst knowing that I already have liquid funds held in my name in a place to which I'm being denied access).
Edit: The example you previously gave of someone who'd put £750k into Lendy, expecting to get a monthly payment that would easily cover their father's care seems a perfect example of this... whilst I don't have the numbers to calculate exactly what a £750k investor's "fair" share of the cash held on account on behalf of "Wealth" investors would be, I'd bet it would cover several month's care home fees... there was a perfectly reasonable expectation when RSM took over that they would be sufficiently competent to reconcile the accounts and put a system in place to allow customers to adequately identify themselves within at most a few weeks. Whilst they can certainly blame Lendy for a lot, I don't see that they can blame Lendy for their own failures in this area.
I'm with you on this, I don't deny that they need to rectify the KYC/AML inadequacies of Lendy, however I think it is being used as a convenient excuse to delay payments of any funds that were already on account and proceeds from sales/recoveries. There's no reason why it should take until October to undertake the process, there must be ulterior motives to the delay after several earlier suggestions of funds on account being released to investors in the near future.
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Post by samford71 on Aug 3, 2019 9:52:47 GMT
All ends up with the tax payer eventually though, that's who these companies get their funds from. The financial services industry is overwhelmingly private sector. The companies in question get their funds primarily from their customers/investors, not the tax paying public. Plenty of overlap between the two, but not the same thing. Yes and no. It isn't funded by the taxpayer, as such, but it's comes out of someone's pocket.
I'll give you an example: me. First, I was a partner in a small hedge fund (<$500mm AUM) for five years. Over that period regulatory costs rose over $1mm per annum. These costs were all associated with protecting retail clients. Higher FCA fees, higher FCSC levies, MIFID2 etc. Except one small problem: we didn't have any retail clients. In fact we didn't have any clients who even had any retail clients. We couldn't transfer the cost our clients since, quite rightly, they would have thrown a wobbly. So that was simply $100k/year out of my pocket to 'protect' a client base that I didn't have and woudn't touch with the longest bargepole. That loss of earnings is also a loss of tax to the government since as an LLP member I would have paid 47% on those profits. To be frank, the rapid rise in compliance costs and levies is driving perfectly good businesses into the ground and favours large businesses over the small, reducing choice. End result is that I've moved to a bigger firm ($10bn AUM) who have more scale to absorb the costs, despite, again, having zero retail clients. It's still costs me in my pocket, just less.
Second, I'm a retail client myself. Now, retail platforms do benefit from levies that give their clients things like FCSC protection but they also pass on some of those costs to their clients. Like the vast majority of retail investors, I'm prudent. Most of my investments are in asset classes like equities and bonds, managed in funds. Only a small proportion (<5%) of my capital gets put into things like loans via P2P. Prudent investors are having to pay for the imprudent. Worst of all, these regulations don't even seem to be working. We are socializing the costs for no clear reason.
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Post by rhea117 on Aug 3, 2019 11:19:41 GMT
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. That is so bad. I just hope someone (FCA/RMS.etc) takes Liam to the cleaners - just for that case alone!
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Monetus
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Post by Monetus on Aug 4, 2019 9:01:22 GMT
There's no reason why it should take until October to undertake the process, there must be ulterior motives to the delay after several earlier suggestions of funds on account being released to investors in the near future. 8 weeks for a third-party agency to manually process KYC/AML for nearly 10,000 investors seems fairly reasonable to me. That's around 250 per day on a five day working week. I wouldn't be surprised if the timescale provided is actually optimistic (but I sure hope not).
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yangmills
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Post by yangmills on Aug 4, 2019 10:31:09 GMT
Lendy Wealth is going to be an "interesting" (not in the good sense) case study into what happens with "Black box" P2P products.
RSM has, quite correctly, decided to treat Lendy Wealth investors identically to self-select investors and thus secured creditors of SSSH. The alternative would have been to treat them as unsecured creditors of Lendy which would be both wrong and likely lead to a very poor outcome in terms of realizations. This treatment, however, does rather lay bare the realities of black box products. The idea that you can take illiquid loans, with no clear redemption date, and turn then magically into something that looks like a savings account or 30/60/90 day term deposit. Are you really happy that that this magical maturity and liquidity transformation can be sustained in perpetuity?
Next there is the fact that in, practical terms, these is nothing more than a unregulated collective investment scheme. Just a collective investment scheme without all the regulatory protections and separation of responsibiltiies that they would be required to have. Most notably a collective investment scheme has protection against the investment adviser going insolvent. Wouldn't that have been useful now? Instead we have a huge lump of counterparty risk (platform risk). As samford71 has repeatedly said on this forum (but completely ignored it seems), you need to think hard about the joint default probability outcome, that both borrower and platform are in effective default, because most platforms are just small SMEs with weak balance sheets that could rollover and fall apart in months. How will realizations look like in that scenario? It's rarely pretty. Does 4, 5, 6% per annum compensate you for that platform risk, never mind the borrower risk? Finally, if these are, in practical terms, collective investment schemes, why doesn't the FCA just force them to be collective investment schemes under say AIFMD regs. Do 90% of retail investors need P2P platforms at all when a CIS could do the job?
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djay
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Post by djay on Aug 4, 2019 10:45:02 GMT
There's no reason why it should take until October to undertake the process, there must be ulterior motives to the delay after several earlier suggestions of funds on account being released to investors in the near future. 8 weeks for a third-party agency to manually process KYC/AML for nearly 10,000 investors seems fairly reasonable to me. That's around 250 per day on a five day working week. I wouldn't be surprised if the timescale provided is actually optimistic (but I sure hope not). 8 weeks is based on them starting now, it was recognised weeks ago and is surely a priority. Significant headway should have already been made.
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thedog
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Post by thedog on Aug 4, 2019 12:14:02 GMT
Lendy Wealth is going to be an "interesting" (not in the good sense) case study into what happens with "Black box" P2P products.
RSM has, quite correctly, decided to treat Lendy Wealth investors identically to self-select investors and thus secured creditors of SSSH. The alternative would have been to treat them as unsecured creditors of Lendy which would be both wrong and likely lead to a very poor outcome in terms of realizations. This treatment, however, does rather lay bare the realities of black box products. The idea that you can take illiquid loans, with no clear redemption date, and turn then magically into something that looks like a savings account or 30/60/90 day term deposit. Are you really happy that that this magical maturity and liquidity transformation can be sustained in perpetuity?
Next there is the fact that in, practical terms, these is nothing more than a unregulated collective investment scheme. Just a collective investment scheme without all the regulatory protections and separation of responsibiltiies that they would be required to have. Most notably a collective investment scheme has protection against the investment adviser going insolvent. Wouldn't that have been useful now? Instead we have a huge lump of counterparty risk (platform risk). As samford71 has repeatedly said on this forum (but completely ignored it seems), you need to think hard about the joint default probability outcome, that both borrower and platform are in effective default, because most platforms are just small SMEs with weak balance sheets that could rollover and fall apart in months. How will realizations look like in that scenario? It's rarely pretty. Does 4, 5, 6% per annum compensate you for that platform risk, never mind the borrower risk? Finally, if these are, in practical terms, collective investment schemes, why doesn't the FCA just force them to be collective investment schemes under say AIFMD regs. Do 90% of retail investors need P2P platforms at all when a CIS could do the job? I've not followed Lendy Wealth so I may be mistaken but when you say "identically to self-select" you mean in that they are linked to the underlying loans (other than model1), right? Reference to "secured creditors of SSSH" makes it sound like the connection to the loan is being broken. Just clarifying.
I suspect you, I and samford71 have similarly backgrounds in the (credit?) markets so one of you may have already commented on this elsewhere but to amplify your comments above I continue to be struck by the similarities to the credit boom of the 00s: - Funding mismatch of long dated assets funded by (supposedly) short-dated investments (as you note)
- Correlation of borrowers and middle-men not understood and largely ignored by lenders (ditto)
- Correlation of underlying borrowers not understood and largely ignored by lenders
- Originate to distribute model
Plus of couse the speculative borrowing and lies common to all credit-bubbles.
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