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Post by valueinvestor123 on Nov 23, 2019 12:28:15 GMT
At the risk of creating yet more threads...I missed the bit where it says that lenders might/will be treated as creditors. I read this here and on the FSAG etc. What is the reason to suppose this?
I can (sort of) understand if borrowers default/loans have to be auctioned off at lower prices (up to a point; valuation standards should also be looked into as getting it so wrong by such magnitudes is surely fraudulent?) but I think every lender at FS was under the impression that we had loan agreements directly with the borrower (via FS) and FCA put their stamp of approval. Surely it's the FCA that should be liable if this wasn't the case as they are supposed to do the necessary due diligence befoe they put their stamp of approval?
Of course if FCA don't have the money to offer compensation, they can also just fold (or re-name itself, as it was done during the 2009 crisis IIRC).
Anyway, maybe we should wait for dust/panic to settle and hopefully there will be some orderly wind down process put in place.
It's weird but I thought it's some of the other platforms that would hit the wall a few years ago because of opaqueness. But strangely, they are still going and the main ones (Lendy & FS) are the ones that got into trouble. I wonder how much confidence will be left in the sector if this doesn't have a fair/reasonable outcome.
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ilmoro
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Post by ilmoro on Nov 23, 2019 13:59:34 GMT
At the risk of creating yet more threads...I missed the bit where it says that lenders might/will be treated as creditors. I read this here and on the FSAG etc. What is the reason to suppose this? I can (sort of) understand if borrowers default/loans have to be auctioned off at lower prices (up to a point; valuation standards should also be looked into as getting it so wrong by such magnitudes is surely fraudulent?) but I think every lender at FS was under the impression that we had loan agreements directly with the borrower (via FS) and FCA put their stamp of approval. Surely it's the FCA that should be liable if this wasn't the case as they are supposed to do the necessary due diligence befoe they put their stamp of approval? Of course if FCA don't have the money to offer compensation, they can also just fold (or re-name itself, as it was done during the 2009 crisis IIRC). Anyway, maybe we should wait for dust/panic to settle and hopefully there will be some orderly wind down process put in place. It's weird but I thought it's some of the other platforms that would hit the wall a few years ago because of opaqueness. But strangely, they are still going and the main ones (Lendy & FS) are the ones that got into trouble. I wonder how much confidence will be left in the sector if this doesn't have a fair/reasonable outcome. The main issue AIUI is while the platform terms said it was operating as a P2P platform with agreements between lenders & borrowers the investigation of how it was actually operating doesnt reflect this, in part or even in entirety. Investors & platform funds were comingled, with company money being lent to borrowers alongside investor funds (Annexe 2, clause 10) and lack of clear records as to what money came from where.
There also seems to be an issue with the structure. Unlike other P2P companies where there is a seperate security trustee company (ie SSSH on Lendy), FS was acting as the security trustee with individual trusts set up for each loan (my interpretation) but with some evidence that these trusts were not set up correctly so that the security assets may not actually be legally ringfenced from FS assets. If the legal opinion sort agrees that the security assets are not ringfenced then investors would not have direct claim on the proceeds from realisations and would therefore become creditors of FS for the money owed under the loans.
As you say until, admin proposals with regards the handling of the loan book are agreed and legal clarity provided as to status, the picture will remian unclear and nothing can be achieved in terms of getting cash back.
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Post by valueinvestor123 on Nov 23, 2019 14:29:27 GMT
Two thoughts come to mind:
1. If cash from the company was comingled with investors' cash in some loans, doesn't it mean that there should be more cash to reclaim, if the was only coming from outside investors? (I probably am misunderstanding this).
2. If term & conditions were violated or not adhered to, isn't it something where FCA should come in on behalf of retail investors since this seems to be the case of fraud rather than some loans simply going bad?
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Post by brightspark on Nov 23, 2019 14:42:04 GMT
My guess FCA will not become involved until after the final report of the Administrators.
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Post by multiaccountmanager on Nov 24, 2019 5:34:28 GMT
My guess FCA will not become involved until after the final report of the Administrators. At what stage does the Administrator make this "final" report? If you mean after the administration is complete and all recoverable funds have been recovered and distributed, then what you are saying seems to mean the FCA aren't likely to materially help us at all. Have we taken competent legal advice that the FCA are effectively impotent as far as we are concerned or do we know for sure this is the case. What are the primary sources of the opinions being expressed about all this? Case law? Counsel's opinion? Solicitor's view? If so what is the identity of the case or person concerned and is there a higher authority we can usefully instruct?
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Post by brightspark on Nov 24, 2019 10:08:56 GMT
Legal advice if any will have been sought by individuals or the various pressure groups that are mentioned on this forum. They tend to keep that advice to themselves.
The FCA is not so much "impotent" as light touch Regulation hedged with caveats still to the fore.
Investors need to know how things have panned out i.e. Administration is effectively completed or near completed and losses crystallised before a case for restitution can be argued.
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adrian77
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Post by adrian77 on Nov 24, 2019 13:25:12 GMT
agreed or to put another way as far as I am concerned a complete waste of time staffed by failed politicians on a gravy train who tell each other how wonderful they are, award each other gongs and in effect do cock-all! Happy to be proven wrong but I have about as much confidence in them as the so-called FS management...l
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Post by multiaccountmanager on Nov 25, 2019 5:18:18 GMT
Legal advice if any will have been sought by individuals or the various pressure groups that are mentioned on this forum. They tend to keep that advice to themselves. The FCA is not so much "impotent" as light touch Regulation hedged with caveats still to the fore. Investors need to know how things have panned out i.e. Administration is effectively completed or near completed and losses crystallised before a case for restitution can be argued. Hmmm. So you imply FSAG might be holding back information gleaned from their legal advice conversation prior to the written document? In the event that the trust documents are ineffective, which will be known quite soon, surely that is a fair trigger for class action against the FCA, albeit not fully quantified, who it seems have supported or given IFISA approval? These seem basic questions to me that surely are not untested in law or legal opinion, or could be tested. Can FSAG please respond here please? or on their forum or in DD if it's deemed confidential. It is an issue for me that we might be giving approval on our proxy to a course of action that reduces the chances of starting action against the FCA. Can FSAG put pip and others minds at rest by explaining the legal source of reasoning as to the course we are on regarding the FCA?
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ilmoro
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Post by ilmoro on Nov 25, 2019 18:00:40 GMT
Legal advice if any will have been sought by individuals or the various pressure groups that are mentioned on this forum. They tend to keep that advice to themselves. The FCA is not so much "impotent" as light touch Regulation hedged with caveats still to the fore. Investors need to know how things have panned out i.e. Administration is effectively completed or near completed and losses crystallised before a case for restitution can be argued. Hmmm. So you imply FSAG might be holding back information gleaned from their legal advice conversation prior to the written document? In the event that the trust documents are ineffective, which will be known quite soon, surely that is a fair trigger for class action against the FCA, albeit not fully quantified, who it seems have supported or given IFISA approval? These seem basic questions to me that surely are not untested in law or legal opinion, or could be tested. Can FSAG please respond here please? or on their forum or in DD if it's deemed confidential. It is an issue for me that we might be giving approval on our proxy to a course of action that reduces the chances of starting action against the FCA. Can FSAG put pip and others minds at rest by explaining the legal source of reasoning as to the course we are on regarding the FCA? You are aware that the FCA has statutory immunity for liability for damages I assume? So legal action isn't really an option. At best you can raise a complaint but even if that is upheld the FCA can just refuse to pay.
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Post by multiaccountmanager on Nov 25, 2019 20:06:33 GMT
Hmmm. So you imply FSAG might be holding back information gleaned from their legal advice conversation prior to the written document? In the event that the trust documents are ineffective, which will be known quite soon, surely that is a fair trigger for class action against the FCA, albeit not fully quantified, who it seems have supported or given IFISA approval? These seem basic questions to me that surely are not untested in law or legal opinion, or could be tested. Can FSAG please respond here please? or on their forum or in DD if it's deemed confidential. It is an issue for me that we might be giving approval on our proxy to a course of action that reduces the chances of starting action against the FCA. Can FSAG put pip and others minds at rest by explaining the legal source of reasoning as to the course we are on regarding the FCA? You are aware that the FCA has statutory immunity for liability for damages I assume? So legal action isn't really an option. At best you can raise a complaint but even if that is upheld the FCA can just refuse to pay. Thank you. That is an outstanding reason for not suing the FCA!! May be we can sue whoever it was made the decision that the FCA was immune  . Just Kidding, that would be our friends in parliament i suspect. What a brilliant set up. So I see may be all we can do is the equivalent of a class action by embarrassing the FCA people so they fear for their jobs and apply pressure for compensation from some form of political source, just as the banks were bailed out in 2008. This whole thing to my mind is fall out from 2008 with people chasing returns because interest rates are "artificiailly" low and Central Banks still keep pumping in money to keep the world afloat after the crash. Meanwhile Hedge funds are able to borrow at very low rates and buy up the world's corporations in open economies and leverage them reducing tax with interest charges and also structuring via tax havens. If and when the final fallout from 2008 arrives, as and when Central Banks and Governments run out of ammunition..............
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ilmoro
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Post by ilmoro on Nov 25, 2019 20:15:07 GMT
You are aware that the FCA has statutory immunity for liability for damages I assume? So legal action isn't really an option. At best you can raise a complaint but even if that is upheld the FCA can just refuse to pay. Thank you. That is an outstanding reason for not suing the FCA!! May be we can sue whoever it was made the decision that the FCA was immune . Just Kidding, that would be our friends in parliament i suspect. What a brilliant set up. So I see may be all we can do is the equivalent of a class action by embarrassing the FCA people so they fear for their jobs and apply pressure for compensation from some form of political source, just as the banks were bailed out in 2008. This whole thing to my mind is fall out from 2008 with people chasing returns because interest rates are "artificiailly" low and Central Banks still keep pumping in money to keep the world afloat after the crash. Meanwhile Hedge funds are able to borrow at very low rates and buy up the world's corporations in open economies and leverage them reducing tax with interest charges and also structuring via tax havens. If and when the final fallout from 2008 arrives, as and when Central Banks and Governments run out of ammunition.............. Yep, shafted by Blair/Brown (FSMA 2000)
Dont know if there is any wiggle room. Seems you can seek judical review of FCA actions
Nobody is allowed to laugh at the quoted reason immunity was necessary.
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Post by FSAG Forum on Nov 25, 2019 21:12:09 GMT
Legal advice if any will have been sought by individuals or the various pressure groups that are mentioned on this forum. They tend to keep that advice to themselves. The FCA is not so much "impotent" as light touch Regulation hedged with caveats still to the fore. Investors need to know how things have panned out i.e. Administration is effectively completed or near completed and losses crystallised before a case for restitution can be argued. Hmmm. So you imply FSAG might be holding back information gleaned from their legal advice conversation prior to the written document? In the event that the trust documents are ineffective, which will be known quite soon, surely that is a fair trigger for class action against the FCA, albeit not fully quantified, who it seems have supported or given IFISA approval? These seem basic questions to me that surely are not untested in law or legal opinion, or could be tested. Can FSAG please respond here please? or on their forum or in DD if it's deemed confidential. It is an issue for me that we might be giving approval on our proxy to a course of action that reduces the chances of starting action against the FCA. Can FSAG put pip and others minds at rest by explaining the legal source of reasoning as to the course we are on regarding the FCA? I cannot say too much here, for obvious reasons, but what I will say is that FSAG will not be taking ANYTHING off the table.
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duck
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Post by duck on Nov 26, 2019 5:52:16 GMT
What a brilliant set up. So I see may be all we can do is the equivalent of a class action by embarrassing the FCA people so they fear for their jobs and apply pressure for compensation from some form of political source, just as the banks were bailed out in 2008. .... Which is exactly what has been going on wrt Collateral for the past 20 months. In that case there were many serious (now documented) failures by the FCA, I'm not prepared to accept AB's continual use of 'unfortunate' when describing the circumstances and the failure of his organisation.
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Post by multiaccountmanager on Nov 26, 2019 12:21:39 GMT
I am delighted to see FSAG is not taking anything off the table. Ilmoro's post gives the link to FSMA 2000 and it appears there IS a route to compensation via the FCA and Independent Complaints Commissioner (ICC)
Also judicial review is possible.
It appears we don't sue the FCA, but we can complain and request compensation and then escalate to ICC and or judicial review as appropriate
So urgent question to FSAG. Are we sure that going down the CC route with the administrator does not prejudice our case with FCA/ICC?
My judgement without the benefit of legal advice is that any compensation awarded by FCA/ICC would require us to have taken reasonable steps and going down the CC and Administrator route looks like reason to me. We could perhaps start a claim (class action claim if permitted) to FCA and quantity it later??
This sort of thing is awkward because it is hard to hire the right lawyer with the overview knowledge. FSAG tell us they have a P2P claims lawyer. Is he up to speed on FCA/ICC complaints and where is his interest - to advise re FCA/ICC or re administration? Could the FCA/ICC dimension lose him a client? Or increase his potential earnings?
I feel FSAG need to be clearer about the legal strategy given this FCA/ICC possibility appears to have been unearthed and brought to light by ilmoro.
My gut tells me this may be best dealt with by a London firm with perhaps easier access to the necessary channels. Of course a lot depends on advice as to whether the FCA have a defence that stands up, and our judgement as to what recovery can be made at what cost based on that advice.
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adrian77
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Post by adrian77 on Nov 26, 2019 13:02:39 GMT
quite possibly - my understanding is that would cost a minimum of £30K but can cost £0.5m
fine if you are a dodgy financial dealer supporting Brexit but who said life was fair!
Agree with all the other points.
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. Just Kidding, that would be our friends in parliament i suspect.