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Post by vonasi on Apr 23, 2024 15:15:21 GMT
I have a complaint in with the FOS but have had no further decision emails from them since the original one that found against AC. Since that one I have also complained about the introduction of the withdrawal fees and I am awaiting a decision as to whether that should be added to my original complaint or be presented as a separate complaint.
Perhaps some peoples complaints have been dismissed as they are not the same as mine and AC managed to weedle out of their complaints but not yet mine? One of my main complaints was that I was given notice of the changes but was then not able to exit from AC despite notifying them that I did not accept the new terms and conditions within the notice period.
Fingers crossed my complaint is still being considered and the rejection is not just delayed in the post. My girlfriend made a very similar complaint and has also not heard from the FOS with any rejection yet.
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Post by giammy on May 4, 2024 11:34:34 GMT
I'm watching this space to confirm how to respond to the Investigator. The investigator has agreed an extension to next Friday, 10 May. How shall we respond?
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rscal
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Post by rscal on May 4, 2024 17:16:40 GMT
I'm watching this space to confirm how to respond to the Investigator. The investigator has agreed an extension to next Friday, 10 May. How shall we respond? I have gone in with two letters: at 1 week and 2 weeks (it's 3 weeks and after the initial 14 days now) which argued 0) I stated I 'agree' with the part that found the variation was 'unfair', but... the investigation (in accepting everything AC has told them) missed/erred/should be changed in respect of 1) The significance of claims of sufficiency in the monitoring fees* (per the 'Standby Wind down plan') Why was this not addressed more fully? 2) The circumstances of the business closure/split (as would be a reasonable question to ask) and overlooked the 'new' fact (post complaint) of redundancy which would imply the closed retail section was loaded with costs that a whole-concern# would share the burden of. Drew attention to: 3) Capital raise in July 22 on Seedrs which painted a picture of a solvent trading entity. The Ombudsman will otherwise simply agree with his colleagues unless fresh arguments are presented AIUI #gave an example from personal experience of a platform closure where 'runoff' of the loanbook has not required separation of units - establishing that what AC did is not the rule and perhaps another reason for looking at it (FOS talked administration from 'their' experience so that's fair game IMO) *MFs include recoveries where they take priority over our capital realizations (w/interest a distant third) so there is income generation there which they chose to understate or ignore.
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Post by bob2010 on May 4, 2024 22:03:24 GMT
I raised similar points to you, but also asked whether the FOS had reviewed the ICARA and Winding down plan that Assetz was required to prepare in line with the FCA reporting requirements. I believe this documentation is crucial to the case, as it would outline the potential costs associated with a wind-down, so the expenses should have already been anticipated and adequately reserved for in line with those FCA requirements. www.handbook.fca.org.uk/handbook/MIFIDPRU/7/5.html |
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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 May 4, 2024 22:27:09 GMT
I raised similar points to you, but also asked whether the FOS had reviewed the ICARA and Winding down plan that Assetz was required to prepare in line with the FCA reporting requirements. I believe this documentation is crucial to the case, as it would outline the potential costs associated with a wind-down, so the expenses should have already been anticipated and adequately reserved for in line with those FCA requirements. www.handbook.fca.org.uk/handbook/MIFIDPRU/7/5.htmlUnfortunately, AC isnt covered by ICARA, they dont meet the requirements. In relation to the winding down plan... two dear CEO letters suggest that the FCA doesnt really give a excremental discharge about them
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Post by bob2010 on May 5, 2024 7:51:58 GMT
I raised similar points to you, but also asked whether the FOS had reviewed the ICARA and Winding down plan that Assetz was required to prepare in line with the FCA reporting requirements. I believe this documentation is crucial to the case, as it would outline the potential costs associated with a wind-down, so the expenses should have already been anticipated and adequately reserved for in line with those FCA requirements. www.handbook.fca.org.uk/handbook/MIFIDPRU/7/5.htmlUnfortunately, AC isnt covered by ICARA, they dont meet the requirements. In relation to the winding down plan... two dear CEO letters suggest that the FCA doesnt really give a excremental discharge about them Are you referring to this letter? www.fca.org.uk/publication/correspondence/portfolio-letter-loan-based-p2p-crowdfunding-platforms.pdf
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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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Likes: 11,549
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Post by ilmoro on May 5, 2024 10:43:30 GMT
There has been more recent stuff as well ... thought Id seen another more recent general letter but it might have been this www.fca.org.uk/firms/authorisation/apply/preparing-wind-down-planPoint is they keep talking about it, telling firms to do it, but then do nothing to ensure they actually achieve the stated objective ... an orderly winddown in all scenarios without impacting lenders
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Post by oliveau on May 22, 2024 15:18:50 GMT
Update re my FOS complaint - [Initially upheld.]
Here's the FOS response that I recently received:
"I’m writing to follow up on my previous findings, in which I upheld your complaint.
I won’t repeat my full reasoning here, but in short:
- I felt it was likely that a Court would conclude the ‘variation clauses’ in Assetz’ terms and conditions were unfair.
- The impact of a term being found unfair by a Court would be that the contract would continue without the unfair term. And so, Assetz would not have been able to rely on the variation clause to introduce the new fee.
- Notwithstanding this, we can depart from what we think a Court would do, in order to reach a fair and reasonable outcome. So, I considered whether Assetz' decision to introduce the new lender fee had an unfair impact on you as a customer.
- Based on the evidence Assetz provided, I didn’t think they’d demonstrated that winding their platform with a lender fee was in the best interests of customers like you. Or, that they’d have been unable to wind down without a lender fee without adversely affecting your position.
- And so, I found that Assetz' decision to introduce a lender fee was unfair. I recommended that they refund all lender fees taken from you, and they should ensure no future such fees were applied to your account. On top of this, I said they should pay 8% interest on any lender fees taken until the date they refunded you.
In responding, Assetz have challenged our findings on the legal aspects relating to the variation clause. They argue that we have given insufficient weight to the fact that the contract was of ‘indeterminate duration’. They say the law, and FCA guidance, both indicate that a term allowing changes for any reason is less likely to be unfair in a contract of indeterminate length. And they also argued the variation clause in their contract was more restrictive than we recognised, as it didn’t allow changes for ‘any reason’.
Without going into the legal position again at length, I do consider both points were addressed in my original view, and I’m not persuaded to depart from my finding that a court would likely find the variation clause was unfair. As I discussed, there is case law recognising that firms have a legitimate interest in allowing themselves to change fees from time to time in indeterminate length contracts. But this isn’t a blanket allowance to make changes, and we must also consider the customer’s ability to understand the reason for potential changes and their potential financial impact, as well customers’ ability to terminate the contract.
That said, Assetz have now submitted evidence showing their planning and modelling of various options for winding down the retail business, which they carried out prior to introducing the lender fee. Based on what I’ve seen, while I still think the term used to introduce the fee is one a court would find unfair, I consider that if the contract operated without the term (and so no fee was introduced), the outcome for you would likely have been worse than what happened.
I therefore I now don’t think it would be fair and reasonable to uphold the complaint or require Assetz to compensate you.
I appreciate this will be disappointing for you, as I am now changing my recommendation so that your complaint isn’t upheld. However, this is because I have now been provided with new evidence which wasn’t available to me when I issued my original findings. I will now explain in detail the evidence I’ve reviewed, and the reason for my new findings.
Wind down
Assetz have explained that in 2022, due to a significant and sudden rise in interest rates, the peer-to-peer loans on their platform were no longer as attractive to new and existing lenders. And so, their retail business model was no longer sustainable. However, the platform still had significant ongoing costs, which were necessary to support the existing loan book and ensure maximum return for existing lenders.
Assetz decided to close their retail platform for new investment in December 2022. For the avoidance of doubt, we consider this decision was something they were entitled to make within the scope of their commercial judgement. And the terms also provided for Assetz to terminate the membership of any lender.
Assetz considered several options of how to manage the wind-down, before settling on a solvent wind-down involving the introduction of a lender fee.
The other options considered were:
- Selling the business. Assetz say this would have involved appointing professional advisers and marketing the business, carrying out due diligence, etc., with no guarantee of finding a suitable buyer in a reasonable timeframe; particularly given the economic background which had made the business less viable to begin with.
- Selling the loan book to a third party, using the sale proceeds to repay investors. Again, this would have involved marketing and finding a willing buyer. Assetz also considered that lenders may not agree to the sale, as any buyer would likely only offer to buy the loan book at a steep discount, resulting in reduced returns.
- Winding down the loan book over the term of the loans without introducing a lender fee. Assetz say that, according to their projections at the time, this would have left a significant operational deficit, and so it wasn’t possible to remain solvent without introducing the lender fee.
- Administration/insolvent wind-down. Assetz have said this would have caused several issues. First would be increased costs, as administrators would require significant fees, including an annual percentage the loan book value, and fees of up to 8% on loans where recovery action was needed.
Assetz also said administration would have had a significant effect on ongoing development loans. Under Assetz' management, and the solvent wind-down plan they enacted, investor’s funds were automatically reinvested into projects to enable them to continue to completion. However, an administrator would likely have distributed all repayments directly back to investors, after taking their own costs.
This risked the failure of developments partway through due to funding shortfalls. This would place investors at risk or large capital losses – not simply a reduction in return.
Assetz noted several similar platforms which went into insolvent wind-down gave investors poor returns on outstanding loans. They estimated that in an insolvent wind-down, only 70% of the full value of outstanding loans may have been recovered.
Assetz estimated that, by introducing the lender fee, and gating withdrawals for a limited time, the platform could remain solvent and ongoing development projects could be funded to completion. And this would result in an estimated return to lenders of close to 100% of capital, plus interest (but less the lender fee). All in all, this was projected to be far better for lenders than the above alternatives.
They argue the approach has proved successful, as the run-off has been performing well with many of the loans repaying. Investors are now receiving repayments, and the gating of withdrawals has ended. The period of automatic reinvestment has secured enough funds to meet future funding commitments for ongoing developments.
The evidence and information I’ve considered
After I issued my initial opinion, Assetz provided further evidence and arguments. These included rationale about why the solvent wind down with a lender fee was the preferred option and best protected the interests of their customers. Based on what I’ve seen, I’m satisfied they carried out financial forecasting for the various options available - and considered the best outcome for investors - before they decided to wind down with a lender fee.
Financial forecasting model
Assetz have provided evidence of the forecasting they did around the various options considered to wind down the platform. This included a detailed financial modelling spreadsheet, with breakdowns for several wind-down scenarios, and projections for income, expenses, overheads, cashflows etc. The model was able to be adjusted to reflect different levels of lender fees, or worst case/best case estimates for each scenario.
They explained their initial responses to our investigation may have been affected by the reduction in staff headcount around that time. As such, they didn’t provide full details of everything they’d done to inform their decision-making before introducing the fee. This wasn't ideal, as we'd expect firms to provide all relevant evidence from the start. That said, I also understand their explanation, and my role is to be impartial, considering anything that's relevant. The new evidence provided evidence shows what Assetz did at the time, and it's fair and reasonable that I now take it account.
Assetz also explained the previous comment that they hadn’t carried out detailed outcome analysis for the various options. They said that, while their forecasting did allow for overall projections default rates for each possible wind-down strategy, they didn’t produce separate forecasting down to the level of each individual loan.
Assetz also shared the changes log for the document with us, showing that it had been extensively worked on by senior staff members – including at board level - before they introduced the lender fee.
I won’t be sharing this document, or full details of everything Assetz have shared with us. We agreed to accept the information in confidence, as we are able to under DISP 3.5.9(2), given the commercially sensitive nature of the information. I will instead summarise the information as far as it pertains to my findings on this complaint.
What the forecast model showed
By using the forecasting model, Assetz found they’d be unable to wind-down without a lender fee without significant operational deficit, which would in turn lead inevitably to administration. And in an administration scenario, for reasons mentioned above, they forecasted much lower returns for investors.
Assetz noted that, since they started operating their retail platform, they’d been able to achieve consistent returns of 7.5%+, using a proactive approach to property-backed lending, and working with borrowers to avert the need for recovery action where possible. Under a potential administration, there was no guarantee the administrators would take similar approach and/or be able to achieve similar returns. Particularly since, as mentioned, they’d likely not have followed a similar approach to ‘gating’ withdrawals and automatically reinvesting funds, which would have jeopardised the ongoing developments.
Assetz explained that their institutional lending business contributed funds to the operating costs of the retail platform. And that, at the time, the group as a whole was not making a profit. So, contrary to the suggestions made by some lenders, it wasn’t the case that retail lenders were required to pay for Assetz' wind-down to protect Assetz' own profit margins. Rather, by imposing a lender fee, the retail side of the business would at least remain viable for the duration of the wind-down, preventing further losses to lenders.
The forecasting model allowed granular adjustments for different levels of lender fees, and based on this, Assetz sought to keep the lender fee to a minimum level while keeping the platform solvent. Ultimately their forecasts weren’t met, and they did need to increase the lender fee to a level of 6% for a period; this was based on updating the forecast model with ‘real world’ data as the situation evolved. That said, overall, I am persuaded by the evidence that the impact of the lender fee on returns was minimal when compared with the possible outcomes in an insolvent wind-down.
Assetz have also clarified that the lender fee itself wasn’t required to fund ongoing developments; the developments were funded by cash held within the access accounts. Rather, the lender fee was to meet increased operational costs, including the work involved in chasing/recovering payments.
My findings
I’ve reminded myself that in considering what’s fair and reasonable, I must have regard to relevant law and regulations, but I am not necessarily bound to follow them.
In the present case, it’s necessary for me to consider whether the variation clauses were potentially unfair as a matter of law. The court is the ultimate arbiter of whether a term, as a matter of law, is an unfair contract term, so I have considered whether I think a court would have a reasonable basis to conclude that a term was unfair.
My view remains that a court would most likely say the term was unfair. And the effect of unfair contract terms as a matter of law is that they will not bind the consumer.
However, I think the primary question for me is whether in substantive terms you were, treated in a way that I consider to be unfair. This is because I don't think it would be fair and reasonable to award compensation if I thought that overall, the actions Assetz took meant you are in a better position now than you would otherwise have been in.
It's important I emphasise here that my role isn't to substitute what I would've done at the time with the decisions Assetz made. Or, to say with certainty that they chose the best option for investors. Rather it’s to consider whether, having regard to all the circumstances, I consider it was fair and reasonable for Assetz to conclude it was acting in your best interests, and the best interests of investors generally, when it introduced the lender fee.
Assetz have provided clear evidence that they considered several possible options of how to wind down the platform, and explained why they made the decision to introduce the lender fee:
- They considered that selling the business carried no guarantee of success, particularly given the economic circumstances which meant their retail business model was less viable in general. If no buyer was found, then the forecasting suggests that the time spent searching could have led to administration as Assetz incurred ongoing administration costs which weren’t sustainable.
I’d also note there would have been no guarantee on how the any potential purchaser firm would themselves have managed the loan book. So overall I think it was fair for them to conclude this option carried considerable risks of losses to investors.
- They considered a sale of the loan book itself. I’m satisfied with their explanation that a discount would need to have been offered for a buyer to consider a sale. I’d also note that, as a service, we’ve seen real-world examples of firms which chose this option. And investors in those cases saw significant reductions in returns.
As such, I’m satisfied it was fair to consider this option would likely have led to larger losses for investors. I’m also not persuaded Assetz would even have been able to sell the loan book, as under their terms Assetz didn’t own the loans to be able to sell; the investors did.
- They considered winding down the loan book without a lender fee. They provided clear evidence that this wasn’t sustainable, and it would inevitably have led to an insolvent wind-down situation.
In an insolvency/administration scenario, they provided reasonable explanations of why this may have led to worse outcomes to investors, including the administration costs and the likely inability fund ongoing development projects to completion.
Again, as a service we are aware of several real examples of similar firms in an insolvent wind-down, and the outcomes investors experienced. Based on all this, I think it’s fair and reasonable to conclude that this would likely have result in larger investor losses than the solvent wind down with a lender fee.
Assetz was required to take into account:
- The impact of any insolvency and the costs that would likely be incurred in achieving it.
- The management of the loans and how that would change in the event of administration, particularly in relation to its proactive approach to property-backed lending, and working with borrowers to avert the need for recovery action where possible. This wasn't something that would continue to be guaranteed.
- The relative cost of introducing the fee to individual consumers.
In reaching its decision on the above, the evidence I've outlined above shows that it gave due and careful consideration to the potential outcomes and examined the data it had available, as well as the forecasts it was able to produce, in order to conclude that of all the options, introducing the fee would likely be the least expensive option for lenders.
So, I'm satisfied that Assetz acted fairly and reasonably in the circumstances, and paid due regard to the interests of its customers. For that reason, even though I've concluded it's likely the variation term would be considered unfair, I'm not persuaded it would be fair and reasonable to award any compensation - because I consider that had Assetz not undertaken the actions that it did, you would've likely suffered even greater losses than the fee you were required to pay.
Why I’m not asking Assetz to take any action
For the reasons I’ve explained above, we’re now unable to uphold your complaint.
I appreciate that this may not be the outcome that you anticipated, and I’m sorry that my findings may come as a disappointment to you. However, I’d like to assure you that I’ve conducted a thorough investigation in order to come to a fair outcome in the circumstances. And I hope my explanations above have helped you understand the reasoning behind the outcome of your complaint.
Next steps
I think this is a fair outcome in the circumstances, for the reasons I’ve explained. If you don’t want to take things further, there’s no need to do anything and we’ll close your case on 1 May 2024.
But if you decide that you don't accept what I’ve said – and want an Ombudsman to make a final decision on your complaint – you must provide any further evidence or representations by 1 May 2024. Requests for more time must also be made by that date. If I don’t hear from you by 1 May 2024 we might not be able to look at your complaint again."
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p2pfan
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Full-Time Investor
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Post by p2pfan on May 22, 2024 20:01:41 GMT
Just received the same follow-up and decision from the FOS for my claim too.
Incredibly disappointed.
Last year the FOS had previous accepted my complaint and determined that Assetz Capital would have to repay me the unfair fees they had taken from me.
The FOS is merely an apologist for financial firms and, in this decision, is basically saying Assetz Capital can charge whatever fees they want whenever they want. The FOS have merely lapped up whatever Assetz Capital has fed them, that they needed to charge all the new fees to continue. Assetz would obviously say that.
I will certainly be contesting the FOS decision through a law or claims firm.
Which no-win no-fee law or claims firms are currently managing these Assetz Capital cases?
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Post by frank121 on May 22, 2024 22:33:26 GMT
Thanks for posting the entire reply Oliveau - it's disappointing but very interesting to read. I have no idea if what AC say is true; i.e without the fee they would have no option other than to perform a insolvent run off. This in my opinion would be a worse option but how do we know this is the truth? I find it strange they didn't provide all this information when originally asked to do so by the FOS and only did so when the outcome was not in their favour. They blame staff shortages etc. Is it a likely story? I just don't know how credible the evidence they provided is, giving the fact the FOS won't share it with you.
Is a change log in a document real evidence, is it certified or verified by any 3rd party? What about all these models and fancy forecasts? Is it verified data, or just make up to satisfy the FOS? Surely all of this can just be faked if they wanted to if it's all in-house data. I am not saying it has; but without seeing it how can any of us know for sure how credible it is. We just have to take their word?
Considering how we have all been treated, it's a tall order.
So yes it does seem that AC can charge whatever they want, so long as the outcome is better than it would be if the fee was not charged.
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"Assetz also shared the changes log for the document with us, showing that it had been extensively worked on by senior staff members – including at board level - before they introduced the lender fee."
"Assetz have provided evidence of the forecasting they did around the various options considered to wind down the platform. This included a detailed financial modelling spreadsheet, with breakdowns for several wind-down scenarios, and projections for income, expenses, overheads, cashflows etc. The model was able to be adjusted to reflect different levels of lender fees, or worst case/best case estimates for each scenario."
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Post by jata on May 23, 2024 7:17:30 GMT
Has anyone challenged the September 22 promotion (eg for QAA) given the rapid closure of withdrawals and then run-off subsequently announced? (As opposed to the variation of fees point). It seems to be this was very clearly unfair and not in the interest of anyone who opened an account in response to that promotion.
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rscal
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Post by rscal on May 23, 2024 8:39:40 GMT
Has anyone challenged the September 22 promotion (eg for QAA) given the rapid closure of withdrawals and then run-off subsequently announced? (As opposed to the variation of fees point). It seems to be this was very clearly unfair and not in the interest of anyone who opened an account in response to that promotion. I don't recall that for Access Accounts but they certainly prised the MLA open with a bit of a shove in July (There had been almost no loan availabilty for many months) Later they become more 'pushy' To which I sent the following: *Just checked. The investors did actually get out of this one in March 23 with interest @9% and 12% backpaid - but then (AIUI) the Lender Fee would collect its share from Dec 22 to Mar 23 (YAY... Before the redundancies hiked it!)
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Post by bob2010 on Jul 31, 2024 13:40:09 GMT
Well it's a long read, but worth it. When am I getting mine? This was to do with the introduction of the previous fees during the pandemic.
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