IFISAcava
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Post by IFISAcava on Aug 16, 2020 11:11:57 GMT
This is an interesting question raised by irobot. "If I place £10,000 in an Access Account, do I receive interest on the whole of that £10,000 or is a part of it excluded due to it being highlighted as 'uninvested cash'?" Again my knowledge is rusty and pre p2p and what I say is very much academic as far as the interest lenders receive. So take what I say with a pinch of salt again. AC say the uninvested cash in the access accounts is held in a segregated client money account. This is good as it provides lenders with some protection. In fact uninvested cash has to be held this way. AC also say that p2p platforms cannot pay interest on deposits on the platform. They are not authorised or regulated for that. Some platforms have paid interest on deposits, e.g. if deposits are held in a segregated client money account at RBS and RBS pays interest on this account. It is the borrowers who pay the interest to lenders (sometimes topped up by the PF). My understanding has been lenders are actually receiving more interest in the invested capital (say 9k) than 3.75% so that the net interest in the total 10k looks like 3.75%. Personally I don't have a problem with this, I think it is quite clever of AC. Borrowers pay much more (look at the MLA rates, which is what they actually pay). AC just allocates part of that incoming to the AA (at a rate equivalent to 3.75% on all your capital) and the rest to the PF (or at the moment also to themselves as part of the 0.9% exceptional fee). So it's really moot whether you are receiving any interest on the uninvested cash portion of the AA capital - you are just getting a capped portion of the interest that borrowers pay on the underlying loans.
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jlend
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Post by jlend on Aug 16, 2020 11:23:42 GMT
This is an interesting question raised by irobot. "If I place £10,000 in an Access Account, do I receive interest on the whole of that £10,000 or is a part of it excluded due to it being highlighted as 'uninvested cash'?" Again my knowledge is rusty and pre p2p and what I say is very much academic as far as the interest lenders receive. So take what I say with a pinch of salt again. AC say the uninvested cash in the access accounts is held in a segregated client money account. This is good as it provides lenders with some protection. In fact uninvested cash has to be held this way. AC also say that p2p platforms cannot pay interest on deposits on the platform. They are not authorised or regulated for that. Some platforms have paid interest on deposits, e.g. if deposits are held in a segregated client money account at RBS and RBS pays interest on this account. It is the borrowers who pay the interest to lenders (sometimes topped up by the PF). My understanding has been lenders are actually receiving more interest in the invested capital (say 9k) than 3.75% so that the net interest in the total 10k looks like 3.75%. Personally I don't have a problem with this, I think it is quite clever of AC. Borrowers pay much more (look at the MLA rates, which is what they actually pay). AC just allocates part of that incoming to the AA (at a rate equivalent to 3.75% on all your capital) and the rest to the PF (or at the moment also to themselves as part of the 0.9% exceptional fee). So it's really moot whether you are receiving any interest on the uninvested cash portion of the AA capital - you are just getting a capped portion of the interest that borrowers pay on the underlying loans. Absolutely, the accounts are very clever in the way they handle interest. It was good to see the PF in action one month in the access accounts recently. The PF covered some of the interest payments when there was insufficient interest payments from borrowers. Hopefully this was a one off, but we may see other months when borrowers don't pay enough interest in the short term, before catching up. It has been interesting watching how AC have handled the last few months in particular. I have been pretty impressed to be honest under the circumstances.
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dead-money
Rocket to the Moon
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Post by dead-money on Aug 16, 2020 13:58:24 GMT
Actually, @mousey 's first question may be the most pertinent - and I wouldn't be surprised if the answer was 'No'. The letter is signed off by: "Megan Butler Executive Director of Supervision - Investment, Wholesale & Specialists Division" but everything I'm reading on the FCA's site suggests P2P falls under the Retail part of "Retail and Authorisations" division. Could well be wrong; and even if correct, doesn't mean there won't be a similar letter heading out to the CEO's of P2P platforms at some point. If not, well ... not a completely pointless thought exercise I s'pose  Confirmed elsewhere by Stuart that this FCA letter has not been sent to P2P platforms and its contents aren't applicable to cash in the access accounts which is allocated and committed for known purposes.
I think the OP and others know full well that the FCA letter relates to uninvested monies sitting within S&S ISA accounts and the like for prolonged periods where it doesn't earn interest.
Your holdings in the Access accounts earn interest on their entirety, whether AC has that money fully loaned out or not.
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rscal
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Post by rscal on Aug 16, 2020 14:32:01 GMT
A letter asking them 'to consider' doing something.... 'heavy' intervention there from the I've Got my job at last the working class can KMA Financial Conduct Authority there. Whatever next?
Yes it's Britain folks where we will only act if it's absolutely, absolutely necessary. Who needs Hans Blix when you have whatshisname.
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alender
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Post by alender on Aug 16, 2020 22:00:05 GMT
When you say "no more contracts" is your interpretation of that in this context just brand new loans or also new tranches of existing loans? All new lending not covered by existing contractual commitments. If that includes new tranches on existing loans then so be it.
Of course if Assetz have allocated £220k to a specific loan then it should be shown as allocated. If the FCA want AC to return excess cash to investors (or give investors the chose of this option) it will be interesting to see what the FCA make on of how much has to be held in the AAs for new tranches, they could say none, apply this proportionately or all of the new tranches. If say AC made a loan of £200,000 with a further commitment of £800,000, £100,000 was loaned from the AAs can AC hold money to fund the remaining £800,000 in the AAs or would it be the proportion of the loan in the AAs, i.e. £400,000.
I would expect it to be none or proportionate otherwise the AAs will become the lender of last resort which I do not think is an appropriate reason to hold onto AA funds as these funds are for the benefit of the AA holders not AC or other lenders.
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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 Aug 16, 2020 22:05:11 GMT
All new lending not covered by existing contractual commitments. If that includes new tranches on existing loans then so be it.
Of course if Assetz have allocated £220k to a specific loan then it should be shown as allocated. If the FCA want AC to return excess cash to investors (or give investors the chose of this option) it will be interesting to see what the FCA make on of how much has to be held in the AAs for new tranches, they could say none, apply this proportionately or all of the new tranches. If say AC made a loan of £200,000 with a further commitment of £800,000, £100,000 was loaned from the AAs can AC hold money to fund the remaining £800,000 in the AAs or would it be the proportion of the loan in the AAs, i.e. £400,000.
I would expect it to be none or proportionate otherwise the AAs will become the lender of last resort which I do not think is an appropriate reason to hold onto AA funds as these funds are for the benefit of the AA holders not AC of other lenders.
They dont, so no point speculating
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Post by bradley02 on Aug 17, 2020 9:12:45 GMT
The FCA letter is not addressed to this sector.
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Mousey
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Post by Mousey on Aug 17, 2020 10:10:33 GMT
The overriding intention of the FCA is that they "expect firms to return client money balances which are unlikely to be reinvested in the short term." There's nothing in the letter that would suggest a difference between the FCA's treatment of non-discretionary and discretionary investments. There's nothing in my understanding of the two terms that would mean client money held would be treated differently across the two categories. I do accept your point that the AA accounts are discretionary but I cannot see a reason why the FCA would apply the advice to only non-discretionary rather than discretionary investments. If people wish to say the letter doesn't specifically relate to Assetz then to avoid repetition I'd point you to my previous post.
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TitoPuente
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Post by TitoPuente on Aug 17, 2020 16:27:26 GMT
Confirmed elsewhere by Stuart that this FCA letter has not been sent to P2P platforms
Please could you point out where was this published? (i.e. where is elsewhere) Thanks!
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Post by Ace on Aug 17, 2020 16:37:14 GMT
Confirmed elsewhere by Stuart that this FCA letter has not been sent to P2P platforms
Please could you point out where was this published? (i.e. where is elsewhere) Thanks! I saw it on Seedrs.
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dead-money
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Post by dead-money on Aug 17, 2020 19:36:40 GMT
The overriding intention of the FCA is that they "expect firms to return client money balances which are unlikely to be reinvested in the short term." There's nothing in the letter that would suggest a difference between the FCA's treatment of non-discretionary and discretionary investments. There's nothing in my understanding of the two terms that would mean client money held would be treated differently across the two categories. I do accept your point that the AA accounts are discretionary but I cannot see a reason why the FCA would apply the advice to only non-discretionary rather than discretionary investments. If people wish to say the letter doesn't specifically relate to Assetz then to avoid repetition I'd point you to my previous post. IF you digest the replies on this thread you should take on board the following.
The FCA letter isn't addressed to P2P platforms. The FCA advice is in regards to uninvested cash on investment platforms.
Money in Access Accounts is fully invested, how AC choose to manage those funds is at their discretion.
See mine and others previous posts...
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Mousey
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Post by Mousey on Aug 17, 2020 20:13:22 GMT
If people wish to say the letter doesn't specifically relate to Assetz then to avoid repetition I'd point you to my previous post. IF you digest the replies on this thread you should take on board the following.
1 - The FCA letter isn't addressed to P2P platforms. 2 - The FCA advice is in regards to uninvested cash on investment platforms. Money in Access Accounts is fully invested, how AC choose to manage those funds is at their discretion. See mine and others previous posts...
1 - Correct, but the intentions can still apply. If the FCA were to issue advice to the P2P sector what reasons would you give for any differences in that advice? 2 - Cash that is held in Assetz's client account is by definition uninvested irrespective of the fact that Assetz purport to be paying interest on it. Cash held in the Assetz client account doesn't meet Article 36H of the FSMA which is the activity that Assetz is authorised by the FCA to provide. Assetz are not a 'bank' and are not authorised to pay 'interest' on 'deposits'. If you disagree can you tell me under what authority or rule is that money counted as invested? It certainly can't be a deposit in a bank nor does it meet the very definition of a P2P agreement.
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