registerme
Member of DD Central
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Post by registerme on Nov 19, 2019 13:34:01 GMT
This feels like the thin end of the wedge of the FCA unloading responsibility onto the lender. Without excusing many of the failings of many platforms, responsibility has always resided with the lender. If this serves to drive that point home then I am in favour of it.
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sl75
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Post by sl75 on Nov 19, 2019 14:32:33 GMT
There are no safety-nets here, just illusions of some. FCA regulation, secondary markets, wind-down plans, PFs, etc, etc - these are all designed to mask the risks, not mitigate them. These (and other) measures do in fact mitigate various risks...
The problem is that "risk mitigation" doesn't mean what a lot of people seem to understand by it - in informal conversation you can hear talk of risks being "eliminated" or "removed" by mitigation factors. Risk mitigation does no such thing.
Any given mitigation factor will either reduce the frequency of a "bad event" occurring, or reduce the damage inflicted by the "bad event", but rarely both, and almost never is a risk reduced to "truly impossible".
Unfortunately, people usually end up taking more risks when there are mitigation factors that they know about because they "feel safer". The increased risk-taking tends to neutralise the effect of those mitigation factors, and in some cases results in a worse outcome than if those people had not been aware of the mitigation factor and thus had not taken the extra risk.
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iRobot
Member of DD Central
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Post by iRobot on Nov 19, 2019 18:29:57 GMT
There are no safety-nets here, just illusions of some. FCA regulation, secondary markets, wind-down plans, PFs, etc, etc - these are all designed to mask the risks, not mitigate them. These (and other) measures do in fact mitigate various risks...
The problem is that "risk mitigation" doesn't mean what a lot of people seem to understand by it - in informal conversation you can hear talk of risks being "eliminated" or "removed" by mitigation factors. Risk mitigation does no such thing.
Any given mitigation factor will either reduce the frequency of a "bad event" occurring, or reduce the damage inflicted by the "bad event", but rarely both, and almost never is a risk reduced to "truly impossible".
Unfortunately, people usually end up taking more risks when there are mitigation factors that they know about because they "feel safer". The increased risk-taking tends to neutralise the effect of those mitigation factors, and in some cases results in a worse outcome than if those people had not been aware of the mitigation factor and thus had not taken the extra risk.
Don't disagree with any of that. But we are venturing into the realms of militating .v. mitigating and, as you correctly surmise, too many folk see 'provision fund' or 'secondary market' and think 'zero risk'. Putting it bluntly, I guess I was addressing the 'retail' and not the 'sophisticated' element of the audience - although that may have been inappropriate of me 
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