macq
Member of DD Central
Posts: 1,934 
Likes: 1,199
|
Post by macq on Nov 2, 2019 11:32:36 GMT
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.  I thought i recognised your speech pattern - so it was you i spoke to 
|
|
aju
Member of DD Central
Posts: 3,500
Likes: 924
|
Post by aju on Nov 2, 2019 11:38:09 GMT
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. I thought i recognised your speech pattern - so it was you i spoke to You must have worked for one of, if not the biggest comms companies in the uk as I was working in what we used to affectionately call the clockwork area some 30 odd years ago. (It technical name was Strowger if you what to look it up but it was replaced by digital back in the late 80's.) All the complaints were internal not customer facing.
|
|
macq
Member of DD Central
Posts: 1,934
Likes: 1,199
|
Post by macq on Nov 2, 2019 11:49:23 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. without rereading the FCA rules - was there not something in the new rules that says when a lender is selling a loan before the end of term(or even in default) that the loan must be revalued/re-priced? p.s i did look - and it says - where the platform is facilitating an exit for a lender before maturity date of the p2p agreement
|
|
|
|
Post by danraj on Nov 2, 2019 11:51:30 GMT
PS19-14 stipulates that loans in default should be repriced. It also clarifies that trading of defaulted microloans is unrestricted. The BBG applies to microloans in arrears, before being classfied as defaulted. So if you are citing the change in rules with relation to repricing of defaulted loans, then these do not apply to the BBG. I apologise, if I have misread / misunterestood your question, but if you are asking me about something you have read in in PS19-14 then, please let me know what part you are referring to: www.fca.org.uk/publication/policy/ps19-14.pdf and I will try to answer as best I can. I take on board the need for a diagram/video/explainer and will work with the team to create this next week. The price of future buyback (fixed at par) is a condition of the sale of microloans with the BBG. So repricing these would not apply. |
|
aju
Member of DD Central
Posts: 3,500
Likes: 924
|
Post by aju on Nov 2, 2019 11:59:02 GMT
I see from companies house that you may have started out as a recoveries business but then changed the recoveries name into its current guise. can I ask how long you are been trading in the P2P domain and more particularly how long you have been actively trading with investors like most of us on these forums.
|
|
macq
Member of DD Central
Posts: 1,934
Likes: 1,199
|
Post by macq on Nov 2, 2019 13:01:04 GMT
PS19-14 stipulates that loans in default should be repriced. It also clarifies that trading of defaulted microloans is unrestricted. The BBG applies to microloans in arrears, before being classfied as defaulted. So if you are citing the change in rules with relation to repricing of defaulted loans, then these do not apply to the BBG. I apologise, if I have misread / misunterestood your question, but if you are asking me about something you have read in in PS19-14 then, please let me know what part you are referring to: www.fca.org.uk/publication/policy/ps19-14.pdf and I will try to answer as best I can. I take on board the need for a diagram/video/explainer and will work with the team to create this next week. The price of future buyback (fixed at par) is a condition of the sale of microloans with the BBG. So repricing these would not apply. it was just a quick look at page 11 that i referenced and seems to mention selling of any sort not just defaults (and i know it will apply to other platforms) but will read later about micro loans being unrestricted but maybe you could supply page or section?
|
|
|
|
Post by danraj on Nov 2, 2019 13:28:07 GMT
I see from companies house that you may have started out as a recoveries business but then changed the recoveries name into its current guise. can I ask how long you are been trading in the P2P domain and more particularly how long you have been actively trading with investors like most of us on these forums. The company was orignally called Ameuri Ltd and Ameuri Recoveries Ltd for the security trust. However the recoveries name had adversarial connotations. The company was lated renamed rebuildingsociety.com ltd, and the trust became Ameuri limited. We completed our first loan in 2013.
|
|
optimist
Member of DD Central
Posts: 124
Likes: 72
|
Post by optimist on Nov 2, 2019 13:48:25 GMT
Danraj - As a HNW/sophisticated lender I understand what you are saying but I have a couple of points for clarification on your web site RE BBG.
In your second paragraph it states "Purchasers incur a temporary loss as they pay a premium, exceeding the value of the capital on the loan, in exchange for the interest receivable on the original microloan."
The premium does not exceed the value of the capital it is in addition to the value of the capital (and around 10% of it)
The premium is not paid in exchange for the interest, it is paid for the guarantee that the seller will buy back the loan if it defaults.
Typos aside, the idea is simple, It's like buying a used car from a dealer(a HNW lender). The dealer charges more but offers you a warranty. You pay for the car plus for the warranty but if the car blows up you get most of your money back (current value of car in this analogy). You don't take the car back to Ford, the warranty is offered directly, cash, from the dealer. To extend the analogy, the dealer buys the car from an auction, anyone can go to an auction but they might buy a bad car. In theory the dealer knows enough about cars that they can pick the good ones and sell them at a profit. They might also return the bad ones to the auction rather than selling them with a warranty if they think they will blow up within the warranty period.
In the case of a loan, the warranty lasts until the loan is paid off, not just for a year and you can sell your loan on to someone else - the warranty is transferrable but the car and thus the warranty devalues to nothing over a period typically of 5 years so if you've had 2 years worth of interest from your loan or use from your car you only get back that value when it blows up / defaults and you don't get the money back for the warranty, the dealer keeps that payment either way so you might be a bit annoyed if it blows up after a week and you don't get all your money back but not as annoyed as if you didn't have the warranty.
Regarding the 10 points, in general I agree, it is flexible and fair when compared to provision funds but more difficult to understand. This suits this platform which is tailored to highrer risk, higher profit investors (in my opinion).
The point "there is no claim process" with BBG and "lenders don’t always know when to expect a payout or the level of the payout" with provision funds is a little misleading. In most cases a company provision fund will have funds and the payment will be made - for example with "Fund Ourselves" it is fast and takes no claiming by punters. With a BBG, it is also automated but the payment is dependent on the seller providing the funds, there is no large float of money. Payment can be enforced against the seller's existing loans but that assumes they can be sold and haven't also defaulted. Payment is dependent on other loans paying up or the seller stumping up the cash. It is too early to claim this specific point as an advantage. In the case of large numbers of defaults both systems will fail, in the case of small defaults, both systems will work but BBG is more susceptible to fluctuations putting a single seller out of business.
The "provision funds are hard to balance" point is that the money is static. This is true and it is why it is there, to provide a buffer. Financial institutions have been forced to keep a larger buffer for this reason. With BBG, your money is guaranteed against the assumed value of other loans which may default. This is intrinsicaly more risky though more efficient.
Overall, great innovative idea that should stabilise the market, spread the risk and offer another revenue for expertise. I plan to use it but am still crunching the numbers as to whether I buy or sell BBG
|
|
macq
Member of DD Central
Posts: 1,934
Likes: 1,199
|
Post by macq on Nov 2, 2019 15:52:09 GMT
it has no bearing on the benefit of not of the BBG or even if its a good idea but in the example above you are getting the warranty from the dealer in this case you are not getting the warranty from the platform(dealer) but from another investor so surely a bit different
|
|
aju
Member of DD Central
Posts: 3,500
Likes: 924
|
Post by aju on Nov 2, 2019 16:15:38 GMT
it has no bearing on the benefit of not of the BBG or even if its a good idea but in the example above you are getting the warranty from the dealer in this case you are not getting the warranty from the platform(dealer) but from another investor so surely a bit different I always thought a warranty from a car dealer was just another revenue stream, especially in the 2nd hand car market, rather than a true entity worth buying. I read the first one that was trying to be sold to me and felt that it wasn't really worth the paper it was written on. Mind you I always bought cars by getting a bank loan than finance from a dealer. I would add it was quite a few years ago when it was always better to be clue in on "Buyer beware" (caveat emptor for posher people like Boris) principles. I think its also called "sold as seen" but that was always from private sellers where there was no warranty elements.
|
|
optimist
Member of DD Central
Posts: 124
Likes: 72
|
Post by optimist on Nov 2, 2019 16:25:26 GMT
it has no bearing on the benefit of not of the BBG or even if its a good idea but in the example above you are getting the warranty from the dealer in this case you are not getting the warranty from the platform(dealer) but from another investor so surely a bit different The dealer = the high net worth / sophisticated lender,
RBS = the auctioneer - they don't own the cars they just facilitate the sale for a small commisison
The newbie lender = the unsuspecting punter at the auction, sometimes getting a bargain and sometimes getting a lemon.
The car = the loan The value of the car = the outstanding capital on the loan The car gives value (interest) over time but it's value drops over time (the loan is paid off) this bit is a bit tenuous
The warranty = the BBG and the payment is direct by the newbie to the dealer (just another punter who know auctions)
The cost of the warranty is dependent on the value of the car % and the liability of the seller (dealer) drops over time as the value of the car drops If the car goes back through the auction the auctioneer takes another small cut for facilitating the process The auction also underwrites the warranty and holds the dealer's stock to ensure they pay up though they don't know whether that stock is a lemon or not
If there were a provision fund, it would be like the auction taking a larger comission and warranting all the cars including the bad ones. This would cost everyone to protect the less experienced but by deskilling the process, the opportunity to find a bargain at the auction or for the dealer to make a profit because he's good at his job would both be reduced
Auctions are indeed sold as seen, loans are Caveat Emptor and if you buy a car from the auction you can't return it any more than you can a non paying loan to RBS. There may be exceptions if it's stolen but that gets difficult.
if the auction house held the dealer's stock against the warranty, it might be worth something. Another key differernce is that the defining feature of a loan is that they pay and the repayment from RBS BBG is automatic if the loan stops paying. The dealerships tend to argue the toss over whether the car is faulty whereas a loan is clearly paying or not after 61 days.
|
|
macq
Member of DD Central
Posts: 1,934
Likes: 1,199
|
Post by macq on Nov 2, 2019 16:46:46 GMT
it has no bearing on the benefit of not of the BBG or even if its a good idea but in the example above you are getting the warranty from the dealer in this case you are not getting the warranty from the platform(dealer) but from another investor so surely a bit different The dealer = the high net worth / sophisticated lender,
RBS = the auctioneer - they don't own the cars they just facilitate the sale for a small commisison
The newbie lender = the unsuspecting punter at the auction, sometimes getting a bargain and sometimes getting a lemon.
The car = the loan The value of the car = the outstanding capital on the loan The car gives value (interest) over time but it's value drops over time (the loan is paid off) this bit is a bit tenuous
The warranty = the BBG and the payment is direct by the newbie to the dealer (just another punter who know auctions)
The cost of the warranty is dependent on the value of the car % and the liability of the seller (dealer) drops over time as the value of the car drops If the car goes back through the auction the auctioneer takes another small cut for facilitating the process The auction also underwrites the warranty and holds the dealer's stock to ensure they pay up though they don't know whether that stock is a lemon or not
If there were a provision fund, it would be like the auction taking a larger comission and warranting all the cars including the bad ones. This would cost everyone to protect the less experienced but by deskilling the process, the opportunity to find a bargain at the auction or for the dealer to make a profit because he's good at his job would both be reduced
good write up of what might be a good idea - but seeing words like newbie,unsuspecting punter and lemon might just keep that car on the forecourt 
|
|
optimist
Member of DD Central
Posts: 124
Likes: 72
|
Post by optimist on Nov 2, 2019 17:16:25 GMT
The dealer = the high net worth / sophisticated lender,
RBS = the auctioneer - they don't own the cars they just facilitate the sale for a small commisison
The newbie lender = the unsuspecting punter at the auction, sometimes getting a bargain and sometimes getting a lemon.
The car = the loan The value of the car = the outstanding capital on the loan The car gives value (interest) over time but it's value drops over time (the loan is paid off) this bit is a bit tenuous
The warranty = the BBG and the payment is direct by the newbie to the dealer (just another punter who know auctions)
The cost of the warranty is dependent on the value of the car % and the liability of the seller (dealer) drops over time as the value of the car drops If the car goes back through the auction the auctioneer takes another small cut for facilitating the process The auction also underwrites the warranty and holds the dealer's stock to ensure they pay up though they don't know whether that stock is a lemon or not
If there were a provision fund, it would be like the auction taking a larger comission and warranting all the cars including the bad ones. This would cost everyone to protect the less experienced but by deskilling the process, the opportunity to find a bargain at the auction or for the dealer to make a profit because he's good at his job would both be reduced
good write up of what might be a good idea - but seeing words like newbie,unsuspecting punter and lemon might just keep that car on the forecourt Thanks, Er, if you want to make lemonade from lemons it needs a warranty? It's not my car and if you can't tell a lemon from a bargain, stick to warranties rather than buying at the auctions I guess. Actually, buy a few really cheap old bangers and learn the trade rather than waving your hard earned around too much at the auction? There are lemons out there, I've bought a few, fixed a few and scrapped a few. I don't work for RBS and hope I'm as critical of things I feel are risky as I am enthusiastic about what I think are good ideas. There are some great bargains at auctions but most people buy from dealerships rather than take the risk. This forum is for the mechanics who are learning the trade. Yeah, I know I've stretched, mashed and mixed my lemonade car metaphores a little too far...
|
|
optimist
Member of DD Central
Posts: 124
Likes: 72
|
Post by optimist on Jan 18, 2020 18:11:09 GMT
I'm wondering about a refund on the BBG premium if the borrower pays after 61 days or if they pay the loan back Either of these can cost the buyer and leave the seller with their profit without them having to cover the liability
O**g is a recent example though premiums were not as high as they will be for others
It would feel more fair if the BBG buyer didn't lose money overall. The BBG seller might keep a proportion of the premium to achieve this but repay a proportion so the buyer is not out of pocket
After a few months. the repayments on the loan cover the BBG cost so this is not needed.
Just thoughts / for discussion for a potential improvement to increase overall happiness / fairness.
There is also the consideration that the seller may have bought at a premium
|
|
|
|
Post by danraj on Jan 19, 2020 15:50:21 GMT
You are right to observe the circumstances that can leave the buyer out of pocket. I hope these risks are clear on the site.
If a BBG microloan holder receives no repayments before a loan is redeemed, then they are extremely unlucky. It's difficult to design something fair to both parties. Would you, as the buyer, be willing to rebate a seller if you bought a microloan at a discount shortly before it was redeemed?
We could look at exceptional circumstances. For example, if it was your first BBG purchase, but I think that handling any exception like this may involve a goodwill promo credit from the firm.
This risk is quite small and I would expect lenders to budget for it. When we know a loam may redeem, we will act to suspend secondary market trading to help mitigate/reduce this risk.
|
|
