pip
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Post by pip on Nov 14, 2019 13:28:29 GMT
I am totally confused.
FCA's definition of self-certified sophisticated investor below.
"I am a self-certified sophisticated investor because at least one of the following applies:
-I am a member of a network or syndicate of business angels and have been so for at least the last six months prior to the date below;
-I am currently, or have been in the two years prior to the date below, a director of a company with an annual turnover of at least £1 million."
Ratesetter seem to have thrown in
"- I am working, or have worked in the two years prior to the date below, in a professional capacity in the provision of finance, resulting in an understanding of the P2P agreements or P2P portfolios to which the promotions will relate - I have made more than one investment in a P2P agreement or P2P portfolio in the two years prior to the date below"
First one, ok. Second one how on earth does that make somebody a sophisticated investor. I could have invested £1 in a platform with no idea what I was doing.
But to certify that I am a restricted investor I have to certify that "in the twelve months preceding the date below, I have not invested more than 10% of my net assets in P2P agreements or P2P portfolios".
What if I don't think I am sophisticated but have put more than 10% of my net assets into P2P. Shouldn't this be the people the FCA is trying to protect, but these guidelines seem to force these people to say they are sophisticated. I am not sophisticated, have invested way too much into P2P and need protection!
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robski
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Post by robski on Nov 14, 2019 14:08:22 GMT
I am totally confused. FCA's definition of self-certified sophisticated investor below. "I am a self-certified sophisticated investor because at least one of the following applies: -I am a member of a network or syndicate of business angels and have been so for at least the last six months prior to the date below; -I am currently, or have been in the two years prior to the date below, a director of a company with an annual turnover of at least £1 million." Ratesetter seem to have thrown in "- I am working, or have worked in the two years prior to the date below, in a professional capacity in the provision of finance, resulting in an understanding of the P2P agreements or P2P portfolios to which the promotions will relate - I have made more than one investment in a P2P agreement or P2P portfolio in the two years prior to the date below"
First one, ok. Second one how on earth does that make somebody a sophisticated investor. I could have invested £1 in a platform with no idea what I was doing.
But to certify that I am a restricted investor I have to certify that "in the twelve months preceding the date below, I have not invested more than 10% of my net assets in P2P agreements or P2P portfolios".
What if I don't think I am sophisticated but have put more than 10% of my net assets into P2P. Shouldn't this be the people the FCA is trying to protect, but these guidelines seem to force these people to say they are sophisticated. I am not sophisticated, have invested way too much into P2P and need protection!There is another thread on this as well, but yes your right. As I posted there, over 2 years ago I was FD in a £130M business. So under the FCA definitions I was sophisticated, yet now not (according to that test) Alternately I know of at least one "wife" who is a director of a business that has a turnover of over £1M, wouldnt be trsuted with the tea kitty, but apparently works hard for the business and is rewarded with a salary to reflect There should be a 5th option. I am an ordinary investor who accepts the increased risk in P2P and that I may lose it all. I may go in excess of 10% of my net investable income in P2P, but recognise that this could bring me either a significant risk or hardship as a result.
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robski
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Post by robski on Nov 14, 2019 14:23:28 GMT
Was just thinking with this talk about sophisticated investor etc
I wonder if RS could provide a level of security that came close.
So work off the 3/4/5% split and have exactly the same, but insurance backed. Effectively replicating or maybe even better the investor protection than FSCS
So imagine if there was a 2% interest fee for protection, that guaranteed no loss of capital. So this would cover any capital should interest be cut below the 2%, or in the case of a provision fund needed a capital haircut or on business failure etc during run down.
Would you invest and see 2% of your interest shaved off in order to protect against loss. I think I would. Compared to the market now, 3% return (5%-2%) I would be really happy with assuming my worst case was a return of capital over a sustained period, ie loss of all interest, just exactly my capital returned (capital being defined as invested + holding as of today, updated to that sum every day in effect).
I wonder if 2% of interest would be enough to get that cover, it sort of sounds reasonable to me.
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Post by propman on Nov 14, 2019 14:25:54 GMT
I am totally confused. FCA's definition of self-certified sophisticated investor below. "I am a self-certified sophisticated investor because at least one of the following applies: -I am a member of a network or syndicate of business angels and have been so for at least the last six months prior to the date below; -I am currently, or have been in the two years prior to the date below, a director of a company with an annual turnover of at least £1 million." Ratesetter seem to have thrown in "- I am working, or have worked in the two years prior to the date below, in a professional capacity in the provision of finance, resulting in an understanding of the P2P agreements or P2P portfolios to which the promotions will relate - I have made more than one investment in a P2P agreement or P2P portfolio in the two years prior to the date below"
First one, ok. Second one how on earth does that make somebody a sophisticated investor. I could have invested £1 in a platform with no idea what I was doing.
But to certify that I am a restricted investor I have to certify that "in the twelve months preceding the date below, I have not invested more than 10% of my net assets in P2P agreements or P2P portfolios".
What if I don't think I am sophisticated but have put more than 10% of my net assets into P2P. Shouldn't this be the people the FCA is trying to protect, but these guidelines seem to force these people to say they are sophisticated. I am not sophisticated, have invested way too much into P2P and need protection!I don't think Ratesetter force anyone to self-certify, they just refuse to let anyone not meeting any of the criteria to stop offering.
Personally I am unsure how to apply the 10% limit. If someone had 50% of their net assets in P2P 2 years ago and had since relent this as it became available (say 30% of net assets) as well as another 5% of their net assets, have they invested 35% of their net assets in P2P or 5%?
As for the dubious additional category, the discussion was around new investors having restricted access for a limited period. I assume this is an attempt to exclude those already in P2P from the restrictions. I am surprised that the rule isn't for 2 investments prior to 2 years ago, although personally I think the rule should be based on higher amounts eg >20 loans that have subsequently been repaid or defaulted. Ongoing loans do not provide experience until resolved especially where loans in arrears have not been defaulted. The less informed investor will see the amounts still outstanding and assume all is fine when they may in fact be the subject to administration etc.
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thedog
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Post by thedog on Nov 14, 2019 14:29:50 GMT
RS's additions seems to be based on:
which as well as the "syndcate of angels" and "company director" criteria includes:
"...(b) I have made more than one investment in an unlisted company in the two years prior to the date below; (c) I am working, or have worked in the two years prior to the date below, in a professional capacity in the private equity sector, or in the provision of finance for small and medium enterprises;...."
Looks like someone (not sure if RS or industry wide) has adapted these to replace PE / unlisted company with P2P. I agree entirely with you that it's quite a stretch to claim equivalance between an unlisted equity invetment and a P2P one such that a single investment makes you sophisticated!
(BTW - good luck trying to claim to be a financially unsophisticated Chartered Accountant!)
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r00lish67
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Post by r00lish67 on Nov 14, 2019 14:35:30 GMT
Was just thinking with this talk about sophisticated investor etc I wonder if RS could provide a level of security that came close. So work off the 3/4/5% split and have exactly the same, but insurance backed. Effectively replicating or maybe even better the investor protection than FSCS So imagine if there was a 2% interest fee for protection, that guaranteed no loss of capital. So this would cover any capital should interest be cut below the 2%, or in the case of a provision fund needed a capital haircut or on business failure etc during run down. Would you invest and see 2% of your interest shaved off in order to protect against loss. I think I would. Compared to the market now, 3% return (5%-2%) I would be really happy with assuming my worst case was a return of capital over a sustained period, ie loss of all interest, just exactly my capital returned (capital being defined as invested + holding as of today, updated to that sum every day in effect). I wonder if 2% of interest would be enough to get that cover, it sort of sounds reasonable to me. I would too, but the flaw in the above is the insurance aspect. If the insurance was sufficiently remunerative to cover capital loss, then almost by definition the insurance would be so expensive as to reduce the return to the risk-free rate less RS's costs. To put it another way, imagine a stock market product where you could insure against your investment going down in capital value at the cost of a slice of your return. Again, the problem is that that slice is going to cost more than any positive return you might make as otherwise you'd be getting something for nothing. Who would take the other side of that bet if not true? Heads you win, tails I lose?
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jlend
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Post by jlend on Nov 14, 2019 14:42:02 GMT
Probably best if this thread was moved from MT to RS.
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Post by df on Nov 14, 2019 14:45:23 GMT
I am totally confused. FCA's definition of self-certified sophisticated investor below. "I am a self-certified sophisticated investor because at least one of the following applies: -I am a member of a network or syndicate of business angels and have been so for at least the last six months prior to the date below; -I am currently, or have been in the two years prior to the date below, a director of a company with an annual turnover of at least £1 million." Ratesetter seem to have thrown in "- I am working, or have worked in the two years prior to the date below, in a professional capacity in the provision of finance, resulting in an understanding of the P2P agreements or P2P portfolios to which the promotions will relate - I have made more than one investment in a P2P agreement or P2P portfolio in the two years prior to the date below"
First one, ok. Second one how on earth does that make somebody a sophisticated investor. I could have invested £1 in a platform with no idea what I was doing.
But to certify that I am a restricted investor I have to certify that "in the twelve months preceding the date below, I have not invested more than 10% of my net assets in P2P agreements or P2P portfolios".
What if I don't think I am sophisticated but have put more than 10% of my net assets into P2P. Shouldn't this be the people the FCA is trying to protect, but these guidelines seem to force these people to say they are sophisticated. I am not sophisticated, have invested way too much into P2P and need protection!In my perception it's just a fancy word. Sounds very wrong when I applied it to myself as an investor (done it twice, once for Lendy and recently for GS). I'm not sure if there's any protection offered by FCA if you tick "restricted". I'd be interested to know if there is.
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pip
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Post by pip on Nov 14, 2019 14:57:19 GMT
I am totally confused. FCA's definition of self-certified sophisticated investor below. "I am a self-certified sophisticated investor because at least one of the following applies: -I am a member of a network or syndicate of business angels and have been so for at least the last six months prior to the date below; -I am currently, or have been in the two years prior to the date below, a director of a company with an annual turnover of at least £1 million." Ratesetter seem to have thrown in "- I am working, or have worked in the two years prior to the date below, in a professional capacity in the provision of finance, resulting in an understanding of the P2P agreements or P2P portfolios to which the promotions will relate - I have made more than one investment in a P2P agreement or P2P portfolio in the two years prior to the date below"
First one, ok. Second one how on earth does that make somebody a sophisticated investor. I could have invested £1 in a platform with no idea what I was doing.
But to certify that I am a restricted investor I have to certify that "in the twelve months preceding the date below, I have not invested more than 10% of my net assets in P2P agreements or P2P portfolios".
What if I don't think I am sophisticated but have put more than 10% of my net assets into P2P. Shouldn't this be the people the FCA is trying to protect, but these guidelines seem to force these people to say they are sophisticated. I am not sophisticated, have invested way too much into P2P and need protection!In my perception it's just a fancy word. Sounds very wrong when I applied it to myself as an investor (done it twice, once for Lendy and recently for GS). I'm not sure if there's any protection offered by FCA if you tick "restricted". I'd be interested to know if there is. I have raised a complaint with ratesetter as I cannot answer the questions as posed: I have more than 10% of my net worth in p2p so cannot tick "restricted" as this requires me to confirm "in the twelve months preceding the date below, I have not invested more than 10% of my net assets in P2P agreements or P2P portfolios" But then I cannot select self-certified sophisticated as I don't meet the FCAs guidelines on what a sophisticated investor is. To suggest anybody who has invested in p2p is sophisticated is ludicrous. If I am cynical this is an attempt to make all people who currently have more than 10% of their net worth in p2p to declare themselves to be sophisticated and therefore to not be subject to the 10% cap. But wasn't the 10% cap brought in to protect investors who don't know what they are doing having too much exposure to p2p, as the disaster at FS is showing why! I personally believe that the wording is totally ambiguous. When I said on the phone I cannot select any option I was told they didn't know how I could proceed and I couldn't even shut down my account without choosing an option. I will update on the outcome of my complaint. By the way it doesn't really matter whether I as a Chartered Accountant with quite a lot of experience in p2p and finance generally am 'sophisticated'. I don't qualify as such under the FCA guidelines and still have no idea what by selecting that I am sophisticated the impact on me. What I more care about is other investors, who may not have any financial awareness who will select self-certified sophisticated because either they think it sounds good for their ego (it does who wants to to be 'restricted' and unsophisticated!) or are doing it based on a few small investments.
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Stonk
Stonking
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Post by Stonk on Nov 14, 2019 15:13:37 GMT
-I am a member of a network or syndicate of business angels and have been so for at least the last six months prior to the date below Yes, this would probably make you a reasonably sophisticated investor who can be trusted to understand P2P.
-I am currently, or have been in the two years prior to the date below, a director of a company with an annual turnover of at least £1 million This certainly does not make you a sophisticated investor. It has nothing much to do with investing, let alone P2P investing.
- I am working, or have worked in the two years prior to the date below, in a professional capacity in the provision of finance, resulting in an understanding of the P2P agreements or P2P portfolios to which the promotions will relate By definition, meeting this condition would give you a good understanding of P2P. My issue with this is that one does not have to be learning about P2P "in a professional capacity" in order to gain that level of understanding. As an avid self-educator, keen to fully understand things I choose to participate in, I think I understand P2P as thoroughly as people in this category.
- I have made more than one investment in a P2P agreement or P2P portfolio in the two years prior to the date below "If you are an unsophisticated numpty and got away with it for 2 years, then congratulations, you have graduated into a sophisiticated investment wizard".
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Stonk
Stonking
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Post by Stonk on Nov 14, 2019 15:18:19 GMT
In my perception it's just a fancy word. Sounds very wrong when I applied it to myself as an investor (done it twice, once for Lendy and recently for GS). I'm not sure if there's any protection offered by FCA if you tick "restricted". I'd be interested to know if there is. I have raised a complaint with ratesetter as I cannot answer the questions as posed:
Isn't that the point? RS do not insist you answer the questions -- only if you wish to invest more. Since you cannot answer RS's questions, then you will not be able to invest any more. When your existing investment reduces through repayments, at some point you will be able to answer the questions and they'll let you invest again.
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pip
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Post by pip on Nov 14, 2019 15:28:38 GMT
I have raised a complaint with ratesetter as I cannot answer the questions as posed:
Isn't that the point? RS do not insist you answer the questions -- only if you wish to invest more. Since you cannot answer RS's questions, then you will not be able to invest any more. When your existing investment reduces through repayments, at some point you will be able to answer the questions and they'll let you invest again.
I cannot currently access my account without answering the question. I was told on the phone that they would not be able to close the account without answering the question as I have invested funds. So I don't think you are correct, you must answer the question to either continue to withdraw or invest more funds.
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pip
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Post by pip on Nov 14, 2019 16:01:45 GMT
Isn't that the point? RS do not insist you answer the questions -- only if you wish to invest more. Since you cannot answer RS's questions, then you will not be able to invest any more. When your existing investment reduces through repayments, at some point you will be able to answer the questions and they'll let you invest again.
I cannot currently access my account without answering the question. I was told on the phone that they would not be able to close the account without answering the question as I have invested funds. So I don't think you are correct, you must answer the question to either continue to withdraw or invest more funds. I have complained to the FCA, they were very helpful and will investigate. I currently cannot access my account as I cannot select one of the options presently as an unsophisticated investor (according to FCA guidelines) with more than 10% of my net wealth in P2P investments.
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Stonk
Stonking
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Post by Stonk on Nov 14, 2019 16:03:15 GMT
Isn't that the point? RS do not insist you answer the questions -- only if you wish to invest more. Since you cannot answer RS's questions, then you will not be able to invest any more. When your existing investment reduces through repayments, at some point you will be able to answer the questions and they'll let you invest again.
I cannot currently access my account without answering the question. I was told on the phone that they would not be able to close the account without answering the question as I have invested funds. So I don't think you are correct, you must answer the question to either continue to withdraw or invest more funds.
I stand corrected. I thought I read somewhere that the quesions were only required in order to continue investing, and that they could be skipped. If not, then it's very silly as plainly there is a subset of people who cannot answer in the affirmative.
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Stonk
Stonking
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Post by Stonk on Nov 14, 2019 16:11:57 GMT
As luck would have it, I just logged in and was presented with the investor choices. I was able to skip making the selection (button at bottom), and could then access my account as normal.
Having logged out and back in again, it asked me again for my choice, which I could again skip.
When it comes to placing an order, of course, there is no option to Skip. Fair enough.
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