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Post by gravitykillz on Dec 26, 2019 21:57:05 GMT
Question:What would happen if assetz became insolvent?
Answer: See lendy thread
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Post by bracknellboy on Dec 26, 2019 22:21:09 GMT
... in the detailed plan with our wind-down partner RSM and we believe that this is a best in class plan. ... . .. Oh & I'm not sure the involvement of RSM is particular selling point amongst many forum members. umm, well quite.
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angrysaveruk
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Say No To T.D.S
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Post by angrysaveruk on Dec 27, 2019 11:31:49 GMT
I have totally exited P2P now except for a few loans that are being run down on AC and Zopa. My view of P2P was always that:
1) There is a fundamental economic reason for P2P - removing the massive overheads of the banks to make loans. It exists for a reason, to cut out the middle man
2) That P2P is likely to go through a confidence crisis at some point with people losing confidence and trying to withdraw their money all at once.
3) That there was a "kicking the can down the road" element to bad loans which people would ignore, but eventually you will end up with a big pile of cans that can no longer be disguised by new loans/money flowing in. This was likely to have a feedback effect with point 2.
A number of questionable decisions by larger P2P platforms made me decide that it was time to exit because of the risk of loss of confidence by investors. It was very profitable for me earning a 6-7% return over 5 years with virtually no losses. I may well return when the dust settles but for now I have pulled the plug on it.
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IFISAcava
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Post by IFISAcava on Dec 27, 2019 11:55:20 GMT
I have totally exited P2P now except for a few loans that are being run down on AC and Zopa. My view of P2P was always that: 1) There is a fundamental economic reason for P2P - removing the massive overheads of the banks to make loans. It exists for a reason, to cut out the middle man 2) That P2P is likely to go through a confidence crisis at some point with people losing confidence and trying to withdraw their money all at once. 3) That there was a "kicking the can down the road" element to bad loans which people would ignore, but eventually you will end up with a big pile of cans that can no longer be disguised by new loans/money flowing in. This was likely to have a feedback effect with point 2. A number of questionable decisions by larger P2P platforms made me decide that it was time to exit because of the risk of loss of confidence by investors. It was very profitable for me earning a 6-7% return over 5 years with virtually no losses. I may well return when the dust settles but for now I have pulled the plug on it. and where have you put the money now, and at what return?
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angrysaveruk
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Say No To T.D.S
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Post by angrysaveruk on Dec 27, 2019 13:19:34 GMT
I have totally exited P2P now except for a few loans that are being run down on AC and Zopa. My view of P2P was always that: 1) There is a fundamental economic reason for P2P - removing the massive overheads of the banks to make loans. It exists for a reason, to cut out the middle man 2) That P2P is likely to go through a confidence crisis at some point with people losing confidence and trying to withdraw their money all at once. 3) That there was a "kicking the can down the road" element to bad loans which people would ignore, but eventually you will end up with a big pile of cans that can no longer be disguised by new loans/money flowing in. This was likely to have a feedback effect with point 2. A number of questionable decisions by larger P2P platforms made me decide that it was time to exit because of the risk of loss of confidence by investors. It was very profitable for me earning a 6-7% return over 5 years with virtually no losses. I may well return when the dust settles but for now I have pulled the plug on it. and where have you put the money now, and at what return? Property and Cash. Probably about 4% overall
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Dec 27, 2019 13:39:25 GMT
Lendy of course had their accounts properly audited by a company that is now part of BDO.
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Post by stuartassetzcapital on Dec 28, 2019 10:47:24 GMT
Question:What would happen if assetz became insolvent? Answer: See lendy thread No, not at all, that couldn't be further from the truth for any well run P2P lender. and most certainly therefore ourselves. That is the point of the new regulations. We have a full and detailed wind-down plan that is the opposite of what Lendy had clearly. A summary of our plan is held in our investor Dashboard. RSM are involved due to their scale and professionalism. What they found when they were asked in to try to sort out the immense mess at Lendy is reported to be an almightly mess. Hence the immense costs. The lack of quality lending is the second large factor. Be careful who you deal with is the lesson and thank the FCA for far tighter rules now on how to run a professional business if you don't already know how to do that.
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Post by stuartassetzcapital on Dec 28, 2019 10:52:54 GMT
This is a very valid point iren . Firms with very detailed and well funded wind-down plans with with serious and well prepared partners for those wind-down plans are key to the risk being reduced back to principally loan risk. We have invested substantial sums in our own systems and also in the detailed plan with our wind-down partner RSM and we believe that this is a best in class plan. We expect this will be of great comfort to investors on top of our blanket property security policy on lending nowadays and 500+ loan diversification of the loan book. I'd be more confident if I could see the loan agreements, security agreements & all other legal paperwork defining relationships between lenders, borrowers, platform agent & security agent. As has just been discovered with a number of platforms the nasty devils are in the detail. Oh & I'm not sure the involvement of RSM is particular selling point amongst many forum members. Our paperwork and structure has already been tested in several ways including in court. It cost me c £250k in legal and regulatory advice originally with top advisers so should be. Perhaps others didn't do things properly to save money. I answered the RSM point above. Hugely competent firm. But not easy when faced with the amateur-hour records and lending of Lendy. Shame on them.
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Post by stuartassetzcapital on Dec 28, 2019 11:13:21 GMT
This is a very valid point iren . Firms with very detailed and well funded wind-down plans with with serious and well prepared partners for those wind-down plans are key to the risk being reduced back to principally loan risk. We have invested substantial sums in our own systems and also in the detailed plan with our wind-down partner RSM and we believe that this is a best in class plan. We expect this will be of great comfort to investors on top of our blanket property security policy on lending nowadays and 500+ loan diversification of the loan book. It is not concerns about the stability of AC that are to the fore. It is the whole p to p industry which is wide open to every chancer about looking for rich pickings. The p to p major players as a whole could have done more and sooner to rein in the excesses exemplified by behaviours of Lendy, Funding Secure and Collateral managements. Presumably the FCA would have welcomed input whereas realistically the FCA is unable to service the whole financial services industry with concerns expressed from small investors unable to be given weight and perhaps credence. I take no comfort from 500+ loans available on the AC platform because if AC goes down, its wind-down plan may well go with it. I still do not know whether, in Administration, to a platform I am a creditor or an investor or both and I don't think our legislators know either. Some would prefer that Administrators simply sold on a loan book to another platform though how feasible this is I am not able to say. Currently the concept of ring-fencing rings hollow with Administrators regarding investors loans as eye-watering fair game. To myself as an insider it is all so simple but never explained well by people that know so here goes... To be clear you are only able to be a creditor in a P2P lending business AIUI, rather than having direct rights to the loan book and its security, if you have a poorly set up lending business. What that means practically is that if you have been lending / gifting money directly to a lending business such as how Lendy operated for a long time I understand, that makes you very exposed and makes them an illegal bank operating without a banking licence under FSMA 2000. That is what RSM walked into. It was public domain knowledge how they operated and I understand it was in the filed accounts and in the terms and conditions, its just no-one cared when offered 12% pa. Do you remember how investors who challenged the Lendy model and quality of lending were shot down by other forum members who wanted to carry on believing ? I can confirm categorically that we are a P2P lender, not a bank, fully authorised and correctly structured so that we are agent to the lender and that you are not a creditor of the firm, rather have full rights to the loans you have funded and all of their security. Anything else would not be legal without substantially different authorisations from the FCA or PRA. Our detailed wind down plan has cost a lot of money and is an extremely detailed document formed with RSM and runs to countless pages and is a complete operating manual and financial model of how this would run if ever needed. You will be pleased to know, as will our shareholders, that the plan has a surplus after all RSM management costs and without any need to take a penny from investors. Unlike some platforms' recent disclosures, we have not taken the option provided by the FCA to have an enlarged management fee deducted from the borrower loan repayments as with a £400m+ loan book and a sensible economic model we do not need that. I hope that helps but would welcome more questions that will get as robust and precise an answer as possible.
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aju
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Post by aju on Dec 28, 2019 11:17:28 GMT
It is not concerns about the stability of AC that are to the fore. It is the whole p to p industry which is wide open to every chancer about looking for rich pickings. The p to p major players as a whole could have done more and sooner to rein in the excesses exemplified by behaviours of Lendy, Funding Secure and Collateral managements. Presumably the FCA would have welcomed input whereas realistically the FCA is unable to service the whole financial services industry with concerns expressed from small investors unable to be given weight and perhaps credence. I take no comfort from 500+ loans available on the AC platform because if AC goes down, its wind-down plan may well go with it. I still do not know whether, in Administration, to a platform I am a creditor or an investor or both and I don't think our legislators know either. Some would prefer that Administrators simply sold on a loan book to another platform though how feasible this is I am not able to say. Currently the concept of ring-fencing rings hollow with Administrators regarding investors loans as eye-watering fair game. To myself as an insider it is all so simple but never explained well by people that know so here goes... To be clear you are only able to be a creditor in a P2P lending business AIUI, rather than having direct rights to the loan book and its security, if you have a poorly set up lending business. What that means practically is that if you have been lending / gifting money directly to a lending business such as how Lendy operated for a long time I understand, that makes you very exposed and makes them an illegal bank operating without a banking licence under FSMA 2000. That is what RSM walked into. It was public domain knowledge how they operated and I understand it was in the filed accounts and in the terms and conditions, its just no-one cared when offered 12% pa. Do you remember how investors who challenged the Lendy model and quality of lending were shot down by other forum members who wanted to carry on believing ? I can confirm categorically that we are a P2P lender, not a bank, fully authorised and correctly structured so that we are agent to the lender and that you are not a creditor of the firm, rather have full rights to the loans you have funded and all of their security. Anything else would not be legal without substantially different authorisations from the FCA or PRA. Our detailed wind down plan has cost a lot of money and is an extremely detailed document formed with RSM and runs to countless pages and is a complete operating manual and financial model of how this would run if ever needed. You will be pleased to know, as will our shareholders, that the plan has a surplus after all RSM management costs and without any need to take a penny from investors. Unlike some platforms' recent disclosures, we have not taken the option provided by the FCA to have an enlarged management fee deducted from the borrower loan repayments as with a £400m+ loan book and a sensible economic model we do not need that. I hope that helps but would welcome more questions that will get as robust and precise an answer as possible. The cynic in me would think you would say this, no offence intended, but is it available for us to read as customers and interested parties, not that I would probably understand it, just wondering on its availability.
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Post by stuartassetzcapital on Dec 28, 2019 11:17:42 GMT
This is a very valid point iren . Firms with very detailed and well funded wind-down plans with with serious and well prepared partners for those wind-down plans are key to the risk being reduced back to principally loan risk. We have invested substantial sums in our own systems and also in the detailed plan with our wind-down partner RSM and we believe that this is a best in class plan. We expect this will be of great comfort to investors on top of our blanket property security policy on lending nowadays and 500+ loan diversification of the loan book. Can you confirm what would happen in the (hopefully unlikely) event that Assetz Capital became insolvent? On the surface it would appear that any "wind down plan" would be rendered null and void because it would be superseded by insolvency law? As others have touched upon, RSM/Baker Tilly was also backup provider to Lendy and had a wind down plan in place with them that didn't get activated as it became insolvent. Investors are now seeing huge chunks taken from their "trust asset" recoveries by RSM in order to pay creditors of Lendy Ltd in a distribution waterfall that ranks the platform's default interest ahead of investor principal. On the surface wind-down plans only appear useful in a utopian, unicorn world where platforms decide to shut down voluntarily rather than due to financial issues. I'd wager that platform insolvency is likely to be the most common reason for any P2P platform to go out of business (we've seen several already). How can we be sure that the same won't happen again here and what safeguards are in place to protect investors in case of platform insolvency? I think I have answered this in detail above. Insolvency Law only applies to loan books of badly set up lenders such as Lendy and others who didn't do effective paperwork or did it on the cheap. We are only agent to the lender and the loans and income and security are all yours bar our disclosed monitoring fee that goes to us. Insolvency law cannot change that. Sometimes you have to be huge and well funded to do things properly and afford the right advice and afford the FCA experienced team members.
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Post by stuartassetzcapital on Dec 28, 2019 11:38:38 GMT
Whilst it might feel reassuring if lenders saw copies of wind down plans, loan agreements, set up of trustee co holding security etc I doubt anyone here could form 100% clear view on legal matters regarding P2P. From the outside it would seem that getting legal opinion on these matters from solicitors isn’t enough. Counsel opinion isn’t sufficient either. The only clarity could be court decisions. In the absence of that clarity lenders need to place even greater reliance on a platforms finances. To do that with a modicum of confidence requires - accounts audited by a reasonably big auditor (top 50 say if outside top 4) - fullest level accounts produced - accounts published quickly after year end (3 months say, not 9) - interim accounts to give half year snapshot. It’s easy to be glib and dismiss Auditors and Annual Reports but they are more reliable than P2P platforms: the platform failure rate (percentage terms) is magnitudes higher than audit failures (companies going bust after a clean full audit from a big auditor). AC is the “poorer” cousin to the big 3 in financial accounts transparency, timeliness and completeness. FC have to meet LSE reporting requirements and expectations and thus use a big 4 firm, report to the highest accounts standards, publish within 3 months of period end and publish interim accounts. Z and RS are not listed so report to a lower level of transparency, timeliness and completeness. AC are a long way behind Z and RS. AC may or may not be still standing long after FC, Z, RS, but AC’s chances would be improved if they could marry a strong enough financial performance (mix of sufficiently robust balance sheet and sufficiently close to or above break even) with clear, full, timely and highly credible financial reporting. Disclosure: I have never invested in RS or Z nor looked at any aspect of these two platforms in anything other than a cursory pass. I have invested on FC and skimmed its financial and IPO published data. I am currently close to 100% exited FC retail but have a small SCRF holding. My largest active P2P exposures are to AC. We are a large company now at £17m revenues last year, cannot therefore publish abbreviated accounts as many do in the sector, and already publish full detailed accounts for the group (Assetz Capital Ltd) as well as the lender 100% owned P2P lending subsidiary (Assetz SME Capital Ltd). We are very profitable on a operational level and choose to reinvest that some years as at present. We were profitable at much smaller scale back in 2015 so our economics work well. We are not as far as you think from RS and Z and FC revenues as we have a more fundamentally income producing business it seems. Our balance sheet and the rest of the consolidated accounts are available at Companies house for ACL around today for the Mar 2019 year end. Unfortunately, issuing accounts in 3 months is unlikely due to auditor requirements as they need time to do the work and carry out detailed audits. We have no plan to issue interim accounts at present but would consider it in the future.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Dec 28, 2019 11:40:50 GMT
Can you confirm what would happen in the (hopefully unlikely) event that Assetz Capital became insolvent? On the surface it would appear that any "wind down plan" would be rendered null and void because it would be superseded by insolvency law? As others have touched upon, RSM/Baker Tilly was also backup provider to Lendy and had a wind down plan in place with them that didn't get activated as it became insolvent. Investors are now seeing huge chunks taken from their "trust asset" recoveries by RSM in order to pay creditors of Lendy Ltd in a distribution waterfall that ranks the platform's default interest ahead of investor principal. On the surface wind-down plans only appear useful in a utopian, unicorn world where platforms decide to shut down voluntarily rather than due to financial issues. I'd wager that platform insolvency is likely to be the most common reason for any P2P platform to go out of business (we've seen several already). How can we be sure that the same won't happen again here and what safeguards are in place to protect investors in case of platform insolvency? I think I have answered this in detail above. Insolvency Law only applies to loan books of badly set up lenders such as Lendy and others who didn't do effective paperwork or did it on the cheap. We are only agent to the lender and the loans and income and security are all yours bar our disclosed monitoring fee that goes to us. Insolvency law cannot change that. Sometimes you have to be huge and well funded to do things properly and afford the right advice and afford the FCA experienced team members. Thats a somewhat odd statement. Im pretty sure Insolvency Law applies to all lenders. The big issue with Lendy is the application of the 'waterfall' when it comes to distributing recoveries. The Lendy waterfall being applied is exactly the same as the AC waterfall ... its written into the security charges for both platforms and thats what RSM are applying. The big difference is the level of fees being charged by Lendy and the application of default interest in Lendy's favour. Insolvency law hasnt changed it. Its not poor documentation, size, poor advice etc. (Quite a few loans on AC where that applies) Its a platform setup to make lots of money in an unsustainable way, ultimately in the interests of neither lenders or borrowers.
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Post by stuartassetzcapital on Dec 28, 2019 11:42:52 GMT
To myself as an insider it is all so simple but never explained well by people that know so here goes... To be clear you are only able to be a creditor in a P2P lending business AIUI, rather than having direct rights to the loan book and its security, if you have a poorly set up lending business. What that means practically is that if you have been lending / gifting money directly to a lending business such as how Lendy operated for a long time I understand, that makes you very exposed and makes them an illegal bank operating without a banking licence under FSMA 2000. That is what RSM walked into. It was public domain knowledge how they operated and I understand it was in the filed accounts and in the terms and conditions, its just no-one cared when offered 12% pa. Do you remember how investors who challenged the Lendy model and quality of lending were shot down by other forum members who wanted to carry on believing ? I can confirm categorically that we are a P2P lender, not a bank, fully authorised and correctly structured so that we are agent to the lender and that you are not a creditor of the firm, rather have full rights to the loans you have funded and all of their security. Anything else would not be legal without substantially different authorisations from the FCA or PRA. Our detailed wind down plan has cost a lot of money and is an extremely detailed document formed with RSM and runs to countless pages and is a complete operating manual and financial model of how this would run if ever needed. You will be pleased to know, as will our shareholders, that the plan has a surplus after all RSM management costs and without any need to take a penny from investors. Unlike some platforms' recent disclosures, we have not taken the option provided by the FCA to have an enlarged management fee deducted from the borrower loan repayments as with a £400m+ loan book and a sensible economic model we do not need that. I hope that helps but would welcome more questions that will get as robust and precise an answer as possible. The cynic in me would think you would say this, no offence intended, but is it available for us to read as customers and interested parties, not that I would probably understand it, just wondering on its availability. Hi We won't publicly publish the detailed in house wind down plan as there is a lot of intellectual property in there. However there may be value in a small group understanding it and with a Q&A with both us and RSM and perhaps reporting back to the wider community. I can explore that if of interest.
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aju
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Post by aju on Dec 28, 2019 11:47:18 GMT
interesting thought!
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