|
|
Post by danraj on Nov 1, 2019 8:42:04 GMT
Earlier this summer rebuildingsociety created a lower-risk structure aimed at investors who are new to p2p lending. It's called the 'BuyBack Guarantee' and it works by allowing sophistocated/HNW lenders to sell microloans with a guarantee to repurchase them, in exchange for a margin. Please read more about it here: www.rebuildingsociety.com/10-reasons-why-a-buyback-guarantee-is-better-than-a-provision-fund/And www.rebuildingsociety.com/buyback-guarantee/Please also see the terms and conditions added to section 17. At a time when there has not been a lot of Innovation in the p2p industry, we hope this development is well received by the p2p community. It has been popular among existing lenders and we hope to better align risk and reward in p2p. We welcome your feedback and comments. |
|
zlb
Member of DD Central
Posts: 1,422
Likes: 333
|
Post by zlb on Nov 1, 2019 17:29:29 GMT
glad you ask. I don't think it's comprehensible, or it's not been explained properly on your site.
1. How legally binding is a buy back guarantee?
2. Sounds to good to be true, so where might I lose out? There's discussion on this on the rebs thread, but even so, it's a logical minefield to work out how to play the system. Unless I've misunderstood the pitfalls in the main thread.
|
|
|
|
Post by danraj on Nov 1, 2019 17:44:45 GMT
Thanks zlbThe BuyBack Gurantee is written into the T&Cs, some terms apply to vendors, others apply to the purchasors. These were proofed by a lawyer, all users are bound by our T&Cs. In theory, you could pay a premium immediately before a borrower redeems a loan. You would have paid a premium for the capital outstanding, and you would only receive 1 term of interest. Though this is quite unlikely, and you would have to be very unlucky to have this happen repeatedly. Gurantors must maintain a portfolio whereby they have not guaranteed more than 40% of the value of their assets. This gives us 60% of collateral to collect from to enforce the guarantees. A symultaous failure of all the businesses would make enforcing the guarantees difficult, but the beneficiaries would be first in line for any recoveries. Please let me know if there is something specific thats difficult to understand and I'll try to clarify it. Thanks & have a pleasant weekend. |
|
zlb
Member of DD Central
Posts: 1,422
Likes: 333
|
Post by zlb on Nov 1, 2019 21:30:23 GMT
To me, it sounds like a complicated board game. As soon as I read the word "premium" it sounds like a technical term and I don't know what it's implications are. It sounds expensive, or are we saying the product, like a sofa, is premium? There's something called premium bonds aren't there? I'm aware that there are a lot of people who are familiar with the technicalities of such arrangements, but I'd need to play this card game a few times to see where I need to be careful, where I might lose, unless someone trumps me, etc. If you're concerned about people not investing, perhaps design some diagrams depicting the process. There's something which sounds reasonable, but it also sounds like there are too many pitfalls, from reading the main thread.
|
|
|
|
Post by danraj on Nov 2, 2019 0:55:00 GMT
Thanks zlbThe premium is the amount paid to the guarantor in exchange for the guarantee. So the guarantor might arrange a £100 microloan at 16%, they then sell it on the secondary market for a price of £110. The difference in the capital outstanding and the price is referred to as the premium (or discount if negative). Depending on the term, the Effective Buyer Rate of the £110 investment may be 6%. This way the profit is shared between two lenders, one for providing the capital and another for keeping the risk. Another way to think of it is the first lender keeps a margin, in exchange for providing the guarantee. I hope that helps. |
|
macq
Member of DD Central
Posts: 1,934 
Likes: 1,199
|
Post by macq on Nov 2, 2019 7:49:40 GMT
Thanks zlb The premium is the amount paid to the guarantor in exchange for the guarantee. So the guarantor might arrange a £100 microloan at 16%, they then sell it on the secondary market for a price of £110. The difference in the capital outstanding and the price is referred to as the premium (or discount if negative). Depending on the term, the Effective Buyer Rate of the £110 investment may be 6%. This way the profit is shared between two lenders, one for providing the capital and another for keeping the risk. Another way to think of it is the first lender keeps a margin, in exchange for providing the guarantee. I hope that helps. i am not an investor with you and its early in the day but you seem to be saying the following - you sell a microloan (i assume there is a max value)the seller keeps 10% of the interest payment and the new buyer gets 6% based on your 16% example or its you pay £110 and the seller keeps £6 (or the figures could be the other way round for investor/seller?) But how does that guarantee a buyback and how can it be enforced? and that is still a question even if i have got the first part wrong
|
|
zlb
Member of DD Central
Posts: 1,422
Likes: 333
|
Post by zlb on Nov 2, 2019 8:37:50 GMT
Thanks zlb The premium is the amount paid to the guarantor in exchange for the guarantee. So the guarantor might arrange a £100 microloan at 16%, they then sell it on the secondary market for a price of £110. The difference in the capital outstanding and the price is referred to as the premium (or discount if negative). Depending on the term, the Effective Buyer Rate of the £110 investment may be 6%. This way the profit is shared between two lenders, one for providing the capital and another for keeping the risk. Another way to think of it is the first lender keeps a margin, in exchange for providing the guarantee. I hope that helps. Can this be put into a flowchart? A list, a table - Technical content often isn't suited to paragraphs, and often is presented differently.
|
|
|
|
Post by danraj on Nov 2, 2019 8:42:26 GMT
If a loan is late, on day 61 past a due repayment, the guarantor automatically is debited the value of the capital outstanding, this is paid over and the microloan is moved back to the guarantor. Please read the terms here: www.rebuildingsociety.com/terms/See from term 17.12 |
|
macq
Member of DD Central
Posts: 1,934
Likes: 1,199
|
Post by macq on Nov 2, 2019 10:01:05 GMT
If a loan is late, on day 61 past a due repayment, the guarantor automatically is debited the value of the capital outstanding, this is paid over and the microloan is moved back to the guarantor. Please read the terms here: www.rebuildingsociety.com/terms/See from term 17.12 assuming i now understand(not a given  ) The guarantor sells a loan at a premium,which is like on a couple of other platforms but if non paying at day 61 they buy it back at par.But just wondering i believe you started this early in the year so has it been cleared under the new FCA rules for trading defaulting loans and the buyback rule by itself?
|
|
aju
Member of DD Central
Posts: 3,500
Likes: 924
|
Post by aju on Nov 2, 2019 11:06:36 GMT
so I started reading the terms and stopped after
4.1.3. you must have a valid EU bank or EU building society account;
I'm out at that point, not a boris get it done out but just that I'd prefer to not have to deal with exchange rates etc when I live in England and do not have any financial interest outside of England.
Unless of course that refers to banks in GB as well.
As for the terms themselves I do agree with others things are not that clear and I guess that's legal speak rather than simple speak. Do these people come under the FCA at all - no I haven't checked just perusing this persons threads and trying to see why they are needing to be all over the place rather than in their own little domain.
so I'm assuming that the OP is one and the same as the Founder and Managing Director as defined on their Website.
He is into rather a spread of companies although that in itself is not a red flag as such.
I also checked out Trust Pilot - just because I can - and to be fair he does seem to be responsive but 34 reviews on a company is not something to really be indicative. There quite a few baduns 20% but then quite a few gooduns 56%.
I think I can make a decision though this for me is too far out in the wilderness so I'll stick with what I've got.
I still think its real interesting that this companie MD is frequenting this forum in the way that they have been of late but I guess there will be takers for this type of market.
|
|
|
|
Post by danraj on Nov 2, 2019 11:24:10 GMT
This would normally apply before the loan is formally in default, which occurs at 90 days past due.
The FCA was consulted about this innovation.
If there is a specific rule or guildeline in the FCA handbook that you are referring to, then please let me know.
I've updated the term to be more post-brexit friendly. Thanks for pointing this out.
* 4.1.3. you must have a valid EU or UK bank or building society account;
As for the domain of conversation. Yes I'm the MD of a platform, but I have a sincere interest in improving outcomes for the whole industry and I believe/hope that the BuyBack Guarantee is a step towards achieving this.
|
|
macq
Member of DD Central
Posts: 1,934
Likes: 1,199
|
Post by macq on Nov 2, 2019 11:25:52 GMT
so I started reading the terms and stopped after 4.1.3. you must have a valid EU bank or EU building society account;
I'm out at that point, not a boris get it done out but just that I'd prefer to not have to deal with exchange rates etc when I live in England and do not have any financial interest outside of England. Unless of course that refers to banks in GB as well. As for the terms themselves I do agree with others things are not that clear and I guess that's legal speak rather than simple speak. Do these people come under the FCA at all - no I haven't checked just perusing this persons threads and trying to see why they are needing to be all over the place rather than in their own little domain. maybe they have looked at the chart in the office and their behind in the race for the xmas bonus 
|
|
aju
Member of DD Central
Posts: 3,500
Likes: 924
|
Post by aju on Nov 2, 2019 11:27:10 GMT
This would normally apply before the loan is formally in default, which occurs at 90 days past due. The FCA was consulted about this innovation. If there is a specific rule or guildeline in the FCA handbook that you are referring to, then please let me know. As the MD shouldn't you or your staff be on this already and be able to answer that question.
|
|
macq
Member of DD Central
Posts: 1,934
Likes: 1,199
|
Post by macq on Nov 2, 2019 11:28:00 GMT
This would normally apply before the loan is formally in default, which occurs at 90 days past due. The FCA was consulted about this innovation. If there is a specific rule or guildeline in the FCA handbook that you are referring to, then please let me know. i just wondered if it was cleared after the new rules
|
|
aju
Member of DD Central
Posts: 3,500
Likes: 924
|
Post by aju on Nov 2, 2019 11:29:41 GMT
so I started reading the terms and stopped after 4.1.3. you must have a valid EU bank or EU building society account;
I'm out at that point, not a boris get it done out but just that I'd prefer to not have to deal with exchange rates etc when I live in England and do not have any financial interest outside of England. Unless of course that refers to banks in GB as well. As for the terms themselves I do agree with others things are not that clear and I guess that's legal speak rather than simple speak. Do these people come under the FCA at all - no I haven't checked just perusing this persons threads and trying to see why they are needing to be all over the place rather than in their own little domain. maybe they have looked at the chart in the office and their behind in the race for the xmas bonus Ahhh! I remember the days when a fault came into the team and someone would look at the top ten board and see what the excuse of the day was and then pushed that one out to unsuspecting complainers.
|
|
)