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Yes, the FCA haven't "approved" the waterfall model; even if they had on what legal basis would they be doing so?

To be clear (quidco) - the FCA approved the waterfall when Lendy first proposed it as a term and condition (Pre RSM).  

Like it or not, that is a fact.

Do you really think that Liam could add a clause that said "send 

Given that Lendy were not authorised to simply change terms and conditions at will under their regulation, it was indeed authorised by the FCA.  Bare in mind that the FCA's main driver for authorised entities is at all times "treating customers fairly".

As for the "leap in logic" - the fact that the FCA have to approve all sale of assets and then all distributions back to lenders is not a leap of logic, it just on multiple occasions underlines the fact that the FCA are approving the waterfall provision.  If they had not approved it, and additionally thought it was not "treating customers fairly" they would not approve the payments.

The FCA approved the waterfall when Lendy made previous payments to lenders not just whilst in administration.

And to be clear, what RSM have done is parked this element of money whilst we via LAG challenge its validity.  Bare in mind RSM have substantial funds to throw at their pals at Eversheds, barristers etc to ensure their gravy train keeps running and they will have taken significant legal advice on this point alone.  They cannot possibly burn up all the cash that is amounting from recoveries so why would they not just capitulate and allow us to get maximum return from the sale of the assets?  

Because they have a legal, court appointed duty to maximise recoveries for ALL creditors and they could be sued by those creditors if they allow money that was contractually due to Lendy, that has been approved by the FCA (both in approving the terms and at each event of approving the waterfall) to be wrongly sent to us the investors - creditors would then sue RSM.

How could the FCA approve a condition which gives lenders an ultimatum to desist using the platform if they do not agree. Considering their investments are tied up in existing loans and require the use of the platform to access their funds?

Apologies - I meant to say "Do you really think that Liam could add a clause such as " send 50% of any recoveries to LB personal bank account " and then when the FCA sign off the firstly the sale of the asset then the distribution to us the lenders, the FCA "overlook" the fact that vast amounts of the recovery are not going back to the lenders?

I dont think investors / lenders on here realise that what is going on is acutely under the extreme vigilance of the FCA - as irobot pointed out, Lendy is STILL under restrictions of the highest level from the FCA.

Now on that point as we are focused on it, the FCA could actually do something about this exact problem (rather than us spend hundreds of thousands of pounds on legal fees fighting RSM) if they wanted to.

Consumer Rights Act 2015 

"Under the CRA the FCA has the power to consider the fairness and transparency of terms in consumer contracts. Where the FCA considers a variation term in a contract to be unfair or lacking in transparency, it may take action to prevent the firm from relying on that term.

SO THE FCA COULD HAVE AND STILL COULD AT ANY TIME STOP RSM RELYING ON THE VAIRED TERMS REGARDING THE WATERFALL....BUT THEY HAVENT AND UNUSUALLY THEY ARE POINTED TO THIS VARIED CLAUSE TWICE ON EVERY RECOVERY - ONCE WHEN THEN SIGN OFF ON SALE OF THE ASSET AND THEN AGAIN WHEN THEY SIGN OFF ON RELEASING MONEY TO INVESTORS.

Fairness and transparency are not new requirements under the CRA. Before it came into force, firms were required to draft fair and transparent terms in consumer contracts under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) and the preceding Unfair Terms in Consumer Contracts Regulations 1994 (the 1994 Regulations). The draft guidance provides references to the relevant provisions in the UTCCRs, and sets out its application to contracts entered into under the 1994 Regulations. It is relevant to all consumer contracts issued by firms following the entry into force of the UTCCRs.

The draft guidance outlines a number of non-exhaustive areas the FCA believes firms should have regard to when drafting and reviewing variation terms. These include and are not limited to the following:

The validity of the reason(s) for varying a term
The transparency of the variation term
Provision for notice in the variation term
Provision for freedom to exit the contract should a consumer not wish to accept the variation
The draft guidance outlines factors for firms to consider when seeking to draft variation terms, and also considers a number of reasons that the FCA has observed firms commonly include, when drafting variation terms allowing them to alter their consumer contracts.

SO THE FCA HAVE SPECIFICALLY ENSURED THAT LENDY HAD TO BE TRANSPARENT AND PROVIDE NOTICE OF THE CHANGES OF THE TERM.

NOTE THAT THERE HAS TO BE A PROVISION FOR US TO BE ABLE TO EXIT THE CONTRACT SHOULD WE NOT WISH TO ACCEPT THE VARIATION.

I FOR ONE SENT A RECORDED DELIVERY LETTER ON SEVERAL OCCASIONS OBJECTING TO THE TERM THAT I KNOW MANY OTHERS ON THIS FORUM HAVE ALSO DONE.

THIS IS A DIFFICULT ISSUE NOW THAT RSM ARE IN PLACE AS OUR RIGHTS UNDER THE CONTRACT ARE IN CONFLICT WITH THE COURTS POSITION THAT LENDY IS IN ADMINISTRATION AND UNDER THE DIRECTION OF THE INSOLVENCY COURTS.

The FCA has published the proposed new draft guidance following the introduction of the CRA and in light of a number of rulings on variation terms in the Court of Justice of the EU. The FCA does not propose to conduct a proactive systemic review assessing the fairness of variation terms in contracts entered into prior to any eventual final guidance being issued. Our day-to-day unfair terms case work has considered variation terms from a variety of products and does not suggest that variation terms have generally been used in a manner likely to cause widespread harm to consumers. Where unfair terms come to the FCA’s attention, and it considers that firms have been relying upon such terms to the detriment of customers, the FCA will challenge firms accordingly.

IM NOT A LAYWER BUT IT MAY WELL BE THAT OUR COMBINED ACTION (AND THAT OF LAG) COULD BE BEST SERVED BY LOBBYING THE FCA TO STEP IN AND DECLARE THAT THE WATERFALL PROVISION IS

- UNFAIR 
- WAS NOT TRANSPARENT
- WAS NOT EFFECTIVELY GIVEN NOTICE
- THE MANNER IN WHICH IS WAS INTRODUCED WAS NOT FAIR, TRANSPARENT OR EFFECTIVELY DONE

THE BIGGER ISSUE WHICH I MADE MENTION OF WHEN I SAID THAT THE INDUSTRY WAS DEVELOPING FASTER THAN THE FCA COULD REGULATE, IS THAT DUE TO THE NATURE OF P2P AND OUR MONEY BEING LOCKED UP IN LOANS, IF THE FCA HAD (OR DOES) CONSIDERED THE WATERFALL TO BE UNFAIR ETC....EXACTLY HOW COULD WE EXIT THE CONTRACT??

IM ABSOLUTELY SURE THAT THE FCA HAS CONSIDERED THIS POINT AS I HAVE ALREADY WRITTEN TO THEM ASKING WHY THEY HAVE NOT DONE SO AND THEIR REPLY WAS MANY MATTERS INCLUDING UNFAIR TERMS AND CONDITIONS ARE BEING CONSIDERED AS PART OF THEIR ON GOING INVESTIGATION INTO LENDY.

I PERSONALLY BELIEVE THAT WE WILL NO DOUBT ULTIMATELY HAVE A CLAIM AGAINST THE FCA, THAT I POINTED OUT IN THE POST YESTERDAY "FCA STARTING TO TWITCH" AS ITS ABSOLUTELY CLEAR THAT THE FCA SHOULD HAVE AND COULD HAVE DONE LOTS TO PREVENT THE LENDY FAILURE BUT THESE CLAIMS WILL BE LIMITED TO A MAXIMUM OF £10,000 AND WILL TAKE A LONG TIME TO REALISE.

I HAVE ENGAGED IRWIN MITCHELL LAW FIRM (TOP 25 IN THE UK) TO REVIEW MY SITUATION AND CONSIDER A CLASS ACTION AGAINST THE FCA AND OTHER AREAS OF REDRESS THAT LAG ARE NOT LOOKING AT AS PRESENT AND I HOPE TO BE ABLE TO UPDATE EVERYONE IN THE NEXT COUPLE OF WEEKS WITH SOME SIGNIFICANT NEWS.   IRWIN MITCHELL ARE SEEKING BARRISTERS OPINION ON SEVERAL MATTERS AND SEEM TO BE REASONABLY COMFORTABLE THAT THERE IS A CASE HERE AS THEY HAVENT ASKED ME TO PAY FOR THE BARRISTERS ADVICE   

Again, no evidence that this constitutes approval of any kind of model.

The waterfall model is in no way enforceable. Over and above the costs of recovery all funds from the sale of the secured assets have to be returned to the lenders of the money, otherwise what is the purpose of secured lending?

This is getting quite interesting.....

The purpose of secured lending is simply that....security is taken over the asset.

This is subject to terms and conditions.

The fact that it is secured lending has no baring what so ever on terms and conditions.

To answer your question of what is the purpose of secured lending?  It doesn't Im afraid mean that our funds are secured - it means that the asset that the funds are lent against is secured so that in the event of a default, the lender can sell the asset to recover as much of its capital as possible less the costs involved in doing that.

This is why additional security is taken, PG's, debentures over Ltd companies etc....if the security over the asset alone was strong enough, the borrower would have been able to demonstrate this to Lendy and negotiate that this was not required.

Lendy quite rightly took additional security and it remains to be seen if RSM enforce these additional securities.

Whilst every case is different, given that we haven't seen even one done as yet is telling.

Look at the hotel / lodge scheme in Paignton, Devon.

The asset was sold for £1m against £7.8m of debt - why has a PG not been called upon from the borrower?  Im sure we will find that this was compromised in the offer to purchase the asset.

So in conclusion the purpose of secured lending is to try minimise the lenders exposure but it does not mean that being secured, it negates contractual terms and conditions between ourselves and Lendy.