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Post by Deleted on Oct 21, 2014 21:44:00 GMT
Further to the question of what p2p finance is and what it is not (ie. it's peer-to-platform-to-peer, not peer-to-peer) and the possibility of platforms failing..........
What shape does a three-way divorce take?
Let's say we have a platform (I'm not thinking about one that's been recently under discussion: this could be any at all) that winds up for whatever reason.
Let's say that not every single loan is in default.
What happens? Do the borrowers have to repay immediately in full, driving them in turn into liquidation?
Do the loans pass in tiny chunks to the lenders, with the borrower accruing a massive admin job?
Do lenders have to make their own arrangements with the borrowers?
Do the loans get blanket-forgiven, assuming the platform can be made liquid?
What priority accrues to the lenders in terms of what happens with liquidated loans as they come in? Let's say a receiver takes ownership of the loan book: would that take the form of a "bail-in", with lenders taking a "haircut"? Or would the lenders be deemed entirely unsecured creditors to the old firm?
Anyone know?
Hmmm maybe it means we can get mediaeval on the defaulters, Bishop Of Bath And Wells style.
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sl75
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Post by sl75 on Oct 21, 2014 23:31:18 GMT
For members of the P2P finance association, it is a requirement of membership that they have arrangements in place to handle the remaining repayments in the event of a platform failure.
It is also an important factor that the legal loan agreement is between the lender and the borrower, and thus remains enforceable even if the platform itself is bankrupt - provided that some entity exists to take over (and even if such a nominated entity doesn't exist or is unable to take over, lenders would have a strong incentive to form one).
I'd see the main risk in that area being not the financial failure of the platform (for which various arrangements can be made, either in advance of or in response to the failure), but a major technical failure or sabotage such that the definitive records of loan agreements, and all backups thereof are destroyed or irretrievably corrupted. In the absence of any proof that a specific borrower owes a specific lender a specific amount, legal enforcement of the debt (or even normal repayment activity) may be a little difficult.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 21, 2014 23:49:39 GMT
Think its a condition of FCA regulation that a plan for the orderly management of the loan book after platform failure exists. Certainly nearly all platforms I use refer to their provision for this in their T&C. Any client funds must be seperate from the platforms own funds and in most cases you are not lending to the platforms so the borrower/lender relationship exists independent of the platform as sl75 said.
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Post by Deleted on Oct 21, 2014 23:53:59 GMT
Thanks for the clarification!
This is a fun case for me because my instinct is to hate the FCA. As it happens in this one instance, they're doing what a private sector 'watermarker' would otherwise do, so while it's bad that they're a monopoly funded through taxes (why should a toilet cleaner pay to make sure my p2p investments are properly regulated?), it's good that someone's doing the work.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 22, 2014 0:04:59 GMT
Thanks for the clarification! This is a fun case for me because my instinct is to hate the FCA. As it happens in this one instance, they're doing what a private sector 'watermarker' would otherwise do, so while it's bad that they're a monopoly funded through taxes (why should a toilet cleaner pay to make sure my p2p investments are properly regulated?), it's good that someone's doing the work. Actually, a lot of the work was done by the platforms themselves. The FCA was a late comer arriving at their request, a tangent to their normal job of regulating (or not) the toilet cleaners banks etc 
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Post by davee39 on Oct 22, 2014 6:57:24 GMT
Thanks for the clarification! This is a fun case for me because my instinct is to hate the FCA. As it happens in this one instance, they're doing what a private sector 'watermarker' would otherwise do, so while it's bad that they're a monopoly funded through taxes (why should a toilet cleaner pay to make sure my p2p investments are properly regulated?), it's good that someone's doing the work. What a remarkably odd train of thought. Most P2P investors will be taxpayers, at 20, 40 & 45%. This income stream will be visible to the revenue and will produce higher taxes than similar investments in FSCS protected assets. The net effect will be that not only is the cost of regulation covered by tax paid by investors, the revenue makes an overall gain.
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pikestaff
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Post by pikestaff on Oct 22, 2014 7:09:32 GMT
...Most P2P investors will be taxpayers, at 20, 40 & 45%. This income stream will be visible to the revenue and will produce higher taxes than similar investments in FSCS protected assets. The net effect will be that not only is the cost of regulation covered by tax paid by investors, the revenue makes an overall gain. Until p2p ISAs come along! Edit: But ISAs, of course, are an evil middle class subsidy that the toilet cleaner cannot afford...
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hendragon
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Post by hendragon on Oct 22, 2014 9:30:31 GMT
as an investor in the failed Squirrl platform I recieved all monies owing including interest up to the point the platform was completely closed. This may not be the best precedent as all loans were granted via one supplier, it does however, give cause for hope.
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Greenwood2
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Post by Greenwood2 on Oct 22, 2014 11:10:25 GMT
And 'Yes Secure' paid back everything.
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niceguy37
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Post by niceguy37 on Oct 27, 2014 12:54:10 GMT
But Quakle did not.
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Post by Deleted on Oct 27, 2014 18:16:43 GMT
nvm  |
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Post by chielamangus on Nov 3, 2014 16:16:37 GMT
Thanks for the clarification! This is a fun case for me because my instinct is to hate the FCA. As it happens in this one instance, they're doing what a private sector 'watermarker' would otherwise do, so while it's bad that they're a monopoly funded through taxes (why should a toilet cleaner pay to make sure my p2p investments are properly regulated?), it's good that someone's doing the work. What a remarkably odd train of thought. Most P2P investors will be taxpayers, at 20, 40 & 45%. This income stream will be visible to the revenue and will produce higher taxes than similar investments in FSCS protected assets. The net effect will be that not only is the cost of regulation covered by tax paid by investors, the revenue makes an overall gain. I think it would be helpful for both contributors on this point to do some reading on public goods (as opposed to private, marketable goods).
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Post by twerling on Nov 4, 2014 0:35:15 GMT
@davee and "public goods":
morality needs to be universal....... if it's wrong for me to pick your pocket then it's wrong for government to do the same thing.....
if you don't agree with that basic moral point then you're granting special privileges to government and hence in a certain sense are 'worshipping' them.
That would of course be your right lol
"Public goods" is a treacherous concept. If you mean there are certain things that people will support collectively, that's clearly true. This will typically be the job of insurers and so on: when you buy your general insurance in a free society, you'll automatically be covered for most of this stuff and at tiny tiny cost.
That's all fine and dandy....... but if by "public goods" you actually mean that particular individuals must be subjected to aggressive initiatory coercion, I'm sorry to say I really can't walk with you down that particular road.
Oh btw @ the toilet cleaner thing: it was a rhetorical strategy - redistribution from a billionaire to a [MOD Deleted] is still immoral, it's just that redistribution from a toilet cleaner to a doctor's son who's training to become a doctor is more obviously immoral to the general public.
In case it seemed otherwise, I wasn't in any way appealing to socialist tendencies: the toilet cleaner is not owed any debt of theft from any other person - it's just that they themselves do not owe anyone a debt of theft. Nobody does.
MOD: Post has been edited to remove pharaseology which is likely to be offensive.
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Post by chielamangus on Nov 4, 2014 19:15:22 GMT
You sound very angry, Twerling. My wife once said to me that angry young men were attractive but angry old men are just annoying. Put me in my place as I hadn't noticed the transition!
By public goods I mean those goods/services which the market would not supply, or not supply in optimum quantities, if left to the private decisions of profit-maximising individuals. That's all. There are many examples where govt steps in to ensure that service is provided. Of course, there are govt failures and the service provided may be inadequate or insufficient or even over the top. It's difficult for govt to get it exactly right because it does not have price signals to guide it. Even capitalists who do have price signals never get it exactly right - there are gluts and shortages and resultant price swings. But the process is one of tatonnement ( if I remember the term correctly) - never ending adjustment to the price signals. The market is never at an equilibrium but always moving towards it. The counterpart, but much, much slower, is govt's response to the opinion of the electorate. Unfortunately, the signals are very mixed, and the electorate quite uninformed, so govts tend to shuffle along making a little change here and a little there, just sufficient to differentiate itself from the main opposition party, and never pleasing anyone. All very frustrating but don't throw the baby out with the bathwater. Govts have an important role - the problem is they are very bad at it.
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adrianc
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Post by adrianc on Nov 5, 2014 13:39:47 GMT
morality needs to be universal....... if it's wrong for me to pick your pocket then it's wrong for government to do the same thing..... By "pick your pocket", if you mean "without notice help themselves to property or money which they have no legal right to", then - yep, we're in agreement. If you mean "whatever tax as has been democratically agreed", then - nope, we're not.
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