pip
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Post by pip on Nov 12, 2019 14:57:58 GMT
I am very alarmed at the proposals from the administrators. A few things that hit me:
- FS were seemingly approved by the FCA without an appropriate wind-down plan
- The legal right of investors to any secured assets is not clear apart from for 5 loans
- FS was lending its own money against loans
- The bad state of controls at FS have been known since at least December 2018 and the FCA allowed FS to continue to trade
- There are non-investor debtors (including former directors) who have significant secured debt
This has seemingly left investors in a terrible position. The administrator has no legal right to manage the loan book, however there is no mechanism for the loans to be managed or funds returned to investors. Investors are now being asked to approve a request from the administrator for investors to be de facto creditors and for them to be able to take their fees from proceeds.
In my opinion to approve this would be a terrible outcome for investors. It would be to accept that the administrators can take their fees from our loans, but to have no clarity as to how the money will be distributed. How will we know that investors will be ahead of other creditors?
I will re-read the proposal, but to me it looks awful for investors. I think we need answers from the FCA, it is not acceptable for them to wipe their hands. They approved FS' regulation and at the time we understood this included a wind-down plan. What are others thoughts?
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Post by mrclondon on Nov 12, 2019 15:04:26 GMT
Its a long document, rather dis-jointed and not that easy to read.
That things were apparently "out of control" (my terminology) is no great surprise - we have noted far too many anomolies for it to be otherwise.
One clear point is the reason for the demise was the cost of ongoing litigation (page 20, para 7)
From my first read through, the proposal for the admin fees (2.5% of recoveries on defaulted loans, 0.125% on in term redemptions) seems an equitable approach. (page 16, para 8.5) 2.5% of say £40m recovered would be £1m.
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Mousey
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Post by Mousey on Nov 12, 2019 15:05:11 GMT
Indeed quite a mess.
Some other snippets: £310,623 - Legal fees owed in the Creditor list totals
£2,400 - The cost of That taxi £1,149 - Owed to Trustpilot
Section 2.22 - There's a freezing order on the director who resigned on 30th Jan 2019 Companies House - Richard Luxmore resigned 30th Jan 2019
No distribution until definitive legal opinion received (at cost of £30k (Page 47))
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Post by defaultinator5000 on Nov 12, 2019 15:30:04 GMT
I am very alarmed at the proposals from the administrators. A few things that hit me: - FS were seemingly approved by the FCA without an appropriate wind-down plan- The legal right of investors to any secured assets is not clear apart from for 5 loans - FS was lending its own money against loans - The bad state of controls at FS have been known since at least December 2018 and the FCA allowed FS to continue to trade- There are non-investor debtors (including former directors) who have significant secured debt This has seemingly left investors in a terrible position. The administrator has no legal right to manage the loan book, however there is no mechanism for the loans to be managed or funds returned to investors. Investors are now being asked to approve a request from the administrator for investors to be de facto creditors and for them to be able to take their fees from proceeds. In my opinion to approve this would be a terrible outcome for investors. It would be to accept that the administrators can take their fees from our loans, but to have no clarity as to how the money will be distributed. How will we know that investors will be ahead of other creditors? I will re-read the proposal, but to me it looks awful for investors. I think we need answers from the FCA, it is not acceptable for them to wipe their hands. They approved FS' regulation and at the time we understood this included a wind-down plan. What are others thoughts? Would this possibly entitle us to FSCS compensation?
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Godanubis
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Anubis is known as the god of death and is the oldest and most popular of ancient Egyptian deities.
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Post by Godanubis on Nov 12, 2019 15:53:20 GMT
I am very alarmed at the proposals from the administrators. A few things that hit me: - FS were seemingly approved by the FCA without an appropriate wind-down plan- The legal right of investors to any secured assets is not clear apart from for 5 loans - FS was lending its own money against loans - The bad state of controls at FS have been known since at least December 2018 and the FCA allowed FS to continue to trade- There are non-investor debtors (including former directors) who have significant secured debt This has seemingly left investors in a terrible position. The administrator has no legal right to manage the loan book, however there is no mechanism for the loans to be managed or funds returned to investors. Investors are now being asked to approve a request from the administrator for investors to be de facto creditors and for them to be able to take their fees from proceeds. In my opinion to approve this would be a terrible outcome for investors. It would be to accept that the administrators can take their fees from our loans, but to have no clarity as to how the money will be distributed. How will we know that investors will be ahead of other creditors? I will re-read the proposal, but to me it looks awful for investors. I think we need answers from the FCA, it is not acceptable for them to wipe their hands. They approved FS' regulation and at the time we understood this included a wind-down plan. What are others thoughts? Would this possibly entitle us to FSCS compensation? Wind down requirement of P2P is not due to be legal until this December.
Overall unsecured debts <£100000 and fees seem to be reasonable and fixed for return of investor money. Plans for running etc. seem reasonable.
Anyone got a better viable solution ?
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pip
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Post by pip on Nov 12, 2019 16:08:43 GMT
Would this possibly entitle us to FSCS compensation? Wind down requirement of P2P is not due to be legal until this December.
Overall unsecured debts <£100000 and fees seem to be reasonable and fixed for return of investor money. Plans for running etc. seem reasonable.
Anyone got a better viable solution ?
FS' own risk warnings section suggests otherwise: www.fundingsecure.com/risk-warningsEffect of FSL Own Insolvency
In line with the FCA’s requirements, FSL’s wind-down policy articulates the necessary provisions in place that aim to maintain client’s best interests. We are responsible for providing staff to monitor the borrowers repayments. Clear this was at best not fit for purpose. I agree that the December 9 requirements seem to add further provisions in this regard, not clear exactly the difference. However I still hold that FS was FCA regulated, the product was aimed at retail investors and the FCA's lack of oversight of what would happen to investors if the platform failed is beyond me. Do I have a better plan? Well: 1) Would the interest of investors not be best served by the administrator just selling the loan book and returning funds to investors. I think it would. 2) Are the administrators really the right people to be winding down loanbook? Do they have any experience in this area? Why not tender for a third party to do it on the administrators behalf? I'll have a go for half a million  3) I think the FCA should own up to their responsibilities here. I totally get it that the risk loans would default was one I accepted. However clearly the oversight by the FCA was not fit for purpose and this has let retail investors get stung. Most of the defaults don't even now seem to be issues with the development etc. not performing, but issues with how the loans were secured, issued or outright fraud. We certainly can't have a plan that leave investors in a totally uncertain position where other creditors, including ex directors, may well have as much access, or even more access to our funds than us!
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pip
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Post by pip on Nov 12, 2019 16:30:42 GMT
I am very alarmed at the proposals from the administrators. A few things that hit me: - FS were seemingly approved by the FCA without an appropriate wind-down plan- The legal right of investors to any secured assets is not clear apart from for 5 loans - FS was lending its own money against loans - The bad state of controls at FS have been known since at least December 2018 and the FCA allowed FS to continue to trade- There are non-investor debtors (including former directors) who have significant secured debt This has seemingly left investors in a terrible position. The administrator has no legal right to manage the loan book, however there is no mechanism for the loans to be managed or funds returned to investors. Investors are now being asked to approve a request from the administrator for investors to be de facto creditors and for them to be able to take their fees from proceeds. In my opinion to approve this would be a terrible outcome for investors. It would be to accept that the administrators can take their fees from our loans, but to have no clarity as to how the money will be distributed. How will we know that investors will be ahead of other creditors? I will re-read the proposal, but to me it looks awful for investors. I think we need answers from the FCA, it is not acceptable for them to wipe their hands. They approved FS' regulation and at the time we understood this included a wind-down plan. What are others thoughts? Would this possibly entitle us to FSCS compensation? I think definitely not. FSCS is a scheme with members who all make contributions and is ultimately backed up by the tax payer. P2P investments are not part of this. However I think there is a question over failure in FCA oversight and as this has contributed to the problems, certainly the lack of a wind-up plan has, investors should hold the FCA to account.
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nick
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Post by nick on Nov 12, 2019 16:56:52 GMT
The administrators fee proposals seem fair and transparent to me. Taking most of their remuneration as a modest % of loan recoveries/repayments with only a small retainer is far better than a hourly fee and ensures that their interests are more aligned with investors. The actions they have taken to date and their report is far more comprehensive than those I've seen in the Col and L administrations.
The major concern I have from reading the administrators' report is the co-mingling of client monies with the firm's own funds. This is a big issue and can potentially completely undermine the effectiveness of the client money controls and invalidating the protection of the segregated funds. I recall in the MF Global administration (at the time one of the largest global brokers before going bust in 2012), co-mingling of firm funds with certain client money accounts resulted in the segregated client monies being brought into the general creditor pool at the detrimental of investors. In addition, client funds that should have been segregated but were not (due to funds passing through the firm and not being deposited in the client account at the time of administration) were treated as general creditor funds even though it was clear that they should have been and had intended to be client funds. Eventually it wasn't to much of an issue as there was a surplus of funds, but at the time it highlighted the fact that investors are very reliant on firms operating client money processes properly and their failure to do so cannot be remedied retrospectively.
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Post by bracknellboy on Nov 12, 2019 17:17:37 GMT
... The major concern I have from reading the administrators' report is the co-mingling of client monies with the firm's own funds. This is a big issue and can potentially completely undermine the effectiveness of the client money controls and invalidating the protection of the segregated funds. ... Wow.
How on earth did FS get FCA full registration (they did get it didn't they) if they didn't have full separation of client funds in place ?? Would this leave the management open to prosecution ?
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iRobot
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Post by iRobot on Nov 12, 2019 18:22:19 GMT
Would this possibly entitle us to FSCS compensation? I think definitely not. FSCS is a scheme with members who all make contributions and is ultimately backed up by the tax payer. P2P investments are not part of this. However I think there is a question over failure in FCA oversight and as this has contributed to the problems, certainly the lack of a wind-up plan has, investors should hold the FCA to account. Warning: my exposure / knowledge is probably outdated and was only tertiary at best, but my understanding was that FSCS maintained a float derived from fees (and fines) levied on Firms and if a claim scenario bust that fund, they would borrow from the Bank of England and then balance the books by increasing the fees to the (surviving) Firms next time around. I guess that in the final reckoning come a real financial meltdown, it might be described as the tax payer being the ultimate guarantor, but that's not how it's supposed to happen. Is it?
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mason
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Post by mason on Nov 12, 2019 19:00:56 GMT
I think definitely not. FSCS is a scheme with members who all make contributions and is ultimately backed up by the tax payer. P2P investments are not part of this. However I think there is a question over failure in FCA oversight and as this has contributed to the problems, certainly the lack of a wind-up plan has, investors should hold the FCA to account. Warning: my exposure / knowledge is probably outdated and was only tertiary at best, but my understanding was that FSCS maintained a float derived from fees (and fines) levied on Firms and if a claim scenario bust that fund, they would borrow from the Bank of England and then balance the books by increasing the fees to the (surviving) Firms next time around. I guess that in the final reckoning come a real financial meltdown, it might be described as the tax payer being the ultimate guarantor, but that's not how it's supposed to happen. Is it?
Essentially what you said, short term financing from BoE, followed by longer term loans from HM Treasury. I don't think the money would ever be recovered through general taxation, rather a QE-type exercise if it were truly infeasible to recover the funds through an increase to the levy.
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Post by mollypoppy on Nov 12, 2019 20:49:03 GMT
Sorry for posting here but I haven't seen the administrators report as yet. Nothing through email etc where can I see the full report please. Thanks in advance Its a long document, rather dis-jointed and not that easy to read.
That things were apparently "out of control" (my terminology) is no great surprise - we have noted far too many anomolies for it to be otherwise.
One clear point is the reason for the demise was the cost of ongoing litigation (page 20, para 7)
From my first read through, the proposal for the admin fees (2.5% of recoveries on defaulted loans, 0.125% on in term redemptions) seems an equitable approach. (page 16, para 8.5) 2.5% of say £40m recovered would be £1m.
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Nov 12, 2019 20:49:35 GMT
I am very alarmed at the proposals from the administrators. A few things that hit me: - FS were seemingly approved by the FCA without an appropriate wind-down plan - The legal right of investors to any secured assets is not clear apart from for 5 loans - FS was lending its own money against loans - The bad state of controls at FS have been known since at least December 2018 and the FCA allowed FS to continue to trade- There are non-investor debtors (including former directors) who have significant secured debt This has seemingly left investors in a terrible position. The administrator has no legal right to manage the loan book, however there is no mechanism for the loans to be managed or funds returned to investors. Investors are now being asked to approve a request from the administrator for investors to be de facto creditors and for them to be able to take their fees from proceeds. In my opinion to approve this would be a terrible outcome for investors. It would be to accept that the administrators can take their fees from our loans, but to have no clarity as to how the money will be distributed. How will we know that investors will be ahead of other creditors? I will re-read the proposal, but to me it looks awful for investors. I think we need answers from the FCA, it is not acceptable for them to wipe their hands. They approved FS' regulation and at the time we understood this included a wind-down plan. What are others thoughts? Let me save you the trouble Mr Teflon-Bailey and tell the masses your reply now - "We didn't intervene at the time because we wanted to avoid a disorderly wind-down" (or somesuch). ONE question for you Mr Teflon-Bailey, have you EVER been gainfully employed in the commercial sector, and/or had a responsible, decisionmaking position in running a commercial ( non quasi/government) business? At all? I ask also the same question of all employees at the FCA. Do ANY of you know ANYTHING other than how to tick boxes and quaff pink gin? Why not OWN UP to your numerous incompetencies, arrange appropriate compensations, and then shut yourselves down. THE FCA IS A COMPLETE, UTTER and TOTAL DISGRACE.
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Post by steve11 on Nov 12, 2019 22:28:19 GMT
Can somebody please give me some guidance about the email sent today by CG and Co regarding the meeting taking place on 28th Nov in Manchester. I am a FS investor, probably like the majority here. I just want to make sure that I am not missing out on any claim as I was not planning to complete and return the 'Proof of Debt form' they have sent, as my understanding is that it needs only to be completed by creditors. Furthermore, I do believe the sole purpose of completing the form is to be eligible to vote at the 28th Nov meeting. Can somebody please confirm that all of the above is correct.
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rogerthat
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Post by rogerthat on Nov 12, 2019 23:57:26 GMT
Can somebody please give me some guidance about the email sent today by CG and Co regarding the meeting taking place on 28th Nov in Manchester. I am a FS investor, probably like the majority here. I just want to make sure that I am not missing out on any claim as I was not planning to complete and return the 'Proof of Debt form' they have sent, as my understanding is that it needs only to be completed by creditors. Furthermore, I do believe the sole purpose of completing the form is to be eligible to vote at the 28th Nov meeting. Can somebody please confirm that all of the above is correct. Another legal virgin here im afraid..having read and failed to fully understand the email Id like to ask the same questions as steve11. Am I correct in thinking im not a creditor but an investor only, so that the form does NOT require filling in ? I would appreciate a public forum post or a PM if that is considered more appropriate I also think the proposed %age Admin fees (2.5% of recoveries on defaulted loans, 0.125% on in term redemption ) would be a preferable way to proceed. Having now read all the recent posts on this Admin mail though and a fairly recent post regarding the Art Loans, I suspect my recoveries aren't going to be much. But at least this situation now has an end point..
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