Post by mrclondon on Dec 31, 2013 11:23:27 GMT
Disclaimer
The following notes from my visit to Lendy Ltd in Portsmouth are my personal views and opinions and in no way relate to the forum administrator role I hold. No responsibility or liability is or will be accepted by me as to the accuracy or completeness of those views or opinions and any such liability is expressly disclaimed. Responsibility for any decision to invest or not with Saving Stream rests exclusively with the individual investor.
Lendy Ltd have reviewed these notes prior to publication, but have not requested that any changes be made.
Lendy Ltd
Of the two directors, one is based in the leased office at the Royal Naval Club in Portsmouth; whilst the other has an office elsewhere and visits the Portsmouth office once or twice a week. The 0845 numbers for SS and LM go through to the directors' office or mobile. There are no other staff at present.
Borro (who are not themselves interested in marine loans) provide referrals to LM via email (one of which I saw).
The printout confirming the FCA Interim Permission (from April 2014) showed the categories applied for are
Lendy have not applied against the "Peer to Peer Lending" category as they do not feel it is applicable to their business model.
Lendy Marine
For each of the three (randomly chosen) loans
I've seen the pawn receipt, the valuation, the 3 way agreement (borrower, Lendy Ltd and the storage facility e.g. a marina), and insurance details noting Lendy's interest. The dates of all documents appear sensible in relation to the declared loan start date on the SS website, and the storage locations correspond with those noted on the SS website (e.g. boatyard on the south coast). The valuation reports appear comprehensive (tens of pages each) and the values correspond to the SS website listings.
I also asked about the 2013 Elan 320 which was repaid after 21 days but in this case was told the borrower had requested total confidentiality (even though I had signed a NDA with Lendy).
The superyacht and the high net worth investor behind the loan do appear to exist, and I saw some evidence of a large 6 figure sum changing hands, as well as the valuation of the yacht. Unfortunately this high net worth investor (who also funded one of the earlier smaller loans) has placed a fixed and floating legal charge on Lendy Ltd, details of which are in the public domain at Companies House. The implication of this is that if Lendy was to be wound up (I've not as yet thought through what other scenarios this might also apply to), this one high net worth individual would get every penny of their money back before the rest of us saw anything. Whilst given the current loan portfolio, the very low LTV of the superyacht mitigates against the risk of the security of the rest of the yachts being called upon to repay the high net worth individual, a fixed and floating charge is an open ended instrument that can cover any future lending activities of that individual with Lendy. With hindsight, Lendy accept the superyacht would have been better handled via a SPV not via Lendy Ltd itself. Early repayment of this loan is expected (but clearly not guaranteed) so this may only be a short term concern until the fixed and floating charge can be flagged as satisfied at Companies House.
One of the completed loans has required an asset sale - the borrower was open and informed LM before the end of the term that repayment would not be made. I saw evidence of two avenues explored in the (claimed successful) quest to find a buyer for the yacht. It's worth noting, however, that it was advertised as being 1 year newer than actually was the case, but Lendy claim the actual month/year would have been clear to the purchaser in the boat's documentation.
I've seen evidence that a loan set up fee is being routinely charged, and hence the stated APR on the LM (and LC) website (53.7%) is wrong as it excludes any fee (a serious breach of the Consumer Credit legislation). The "Loan Calculator" is similarly misleading.
As a marketing tool the LM (and LC) websites seem very amateurish, and contain very vague T&C's which don't describe the business model. My concern is the website probably puts off more potential borrowers than it convinces to follow through with an enquiry. Having both the news and twitter feeds dead for the last ten months doesn't help.
Saving Stream
I've seen emails covering the three testimonials currently on the website, two of which appear to originate from the named individuals. I've also seen evidence of an investor who transferred funds to Lendy in February 2013 in return for a monthly interest rate.
The subject of yacht photos remains contentious. Lendy believe that the use of actual asset photos even if redacted of boat name etc is dangerous on privacy grounds as the marina backdrop could allow identification by those who know the marina. Equally Lendy accept the current situation isn't really tenable either as there are no receipts available to validate the images as stock photos, nor is there written permission to use the photos. Stalemate - us lenders want redacted photos of the actual asset (which is what we are told we are getting in the T&C's) but Lendy are currently minded to go with "modified" internet images (but I'm not convinced they understand the image tagging technology underpinning camera images to do this reliably 100% of the time - a single slip could leave them open to legal action. Their suggestion of mirror imaging the photo so that it is "different" to the original illustrates the lack of technical understanding very clearly.)
The SS T&C's still contain mis-numbered references to other clauses; references to the word "saver" which the FCA consultation paper cautions against; inconsistencies on password disclosure; and both sections 5 & 17 contain irrelevant and confusing detail relating to borrowers (who aren't directly relevant to SS). One such clause references the fact that borrowers are charged a minimum of 30 days interest ... yet the 21 day loan proves the lenders don't benefit. Not great PR.
T&C 5.2.4 indicates that in the event that the asset turns out the be stolen / fake, SS will reimburse lenders. Presumably Lendy's expectation is that insurance covers this risk ... but what if it doesn't ? SS also indicated on this forum, that they would cover a shortfall on the sale of the asset. This is not in the T&C and so is not clear that this actually applies or the extent of it (capital ? interest ? ). It isn't immediately apparent if this is an insured (or indeed insurable) risk or not, and whether Lendy Ltd's own capital reserves are adequate to support this policy.
Although mentioned on the forum previously it is worth remembering that the borrower's loan term is 6 months (with no early repayment penalty), but the lenders loan term of "up to 7 months" is to provide a time margin for the statutory notice plus fire sale of the asset in the event of no repayment by the borrower. This should imply that most loans won't see much if any of the seventh month. It was stated verbally (but not in the T&C as far as I can see) that lenders would be repaid from Lendy funds at the 7 month mark if a sale hadn't been achieved. Again its not clear whether Lendy Ltd's own capital reserves are adequate to support this policy.
The T&C's fail to mention the processes that would be followed in the event of Lendy Ltd being wound up, and whether the body expected to carry this out have had any input into the lender records being created to confirm they are fit for purpose. Whilst the platform software appears to be creating a database of loan parts owned by each lender, if anything should happen to the two Lendy directors it is not clear to me the extent to which a third party could be expected to piece together the records. At present there does not appear to be a nominated body for this role, and hence it is very unlikely that this scenario has been "wargamed".
OFI's (Opportunities for improvement)
1. Undertake a thorough review of SS's T&C's & Privacy Policy to ensure the wording matches the business model exactly.
2. Document and agree a wind-up plan for Lendy Ltd with a nominated 3rd party.
3. Ensure the extent of the capital repayments covered by Lendy is unambiguous and is supportable by Lendy financially via adequate capital reserves
4. File Lendy Ltd first accounts with companies house / HMRC sooner rather than later.
5. Resolve the yacht photo dilemma
6. Consider paying lenders 30 days interest on loans repaid in the first 30 days
7. Review SS website login time out which seems too short
8. Correct LM/LC website APR and Loan Calculators {high priority)
9. Once the superyacht loan is redeemed, ensure the fixed and floating legal charge is flagged as satisfied at companies house asap.
10. Agree with legal advisers a better corporate structure for handling "superyacht" loans
11. Write a set of T&C's for the LM/LC websites that reflect the business model
12. Consider a major rewrite of LM/LC websites
13. Consider whether the FCA might throw a spanner in the works in relation to the trading name "Saving Stream"
Glossary
LC Lendy Classic
LM Lendy Marine
SS Saving Stream
The following notes from my visit to Lendy Ltd in Portsmouth are my personal views and opinions and in no way relate to the forum administrator role I hold. No responsibility or liability is or will be accepted by me as to the accuracy or completeness of those views or opinions and any such liability is expressly disclaimed. Responsibility for any decision to invest or not with Saving Stream rests exclusively with the individual investor.
Lendy Ltd have reviewed these notes prior to publication, but have not requested that any changes be made.
Lendy Ltd
Of the two directors, one is based in the leased office at the Royal Naval Club in Portsmouth; whilst the other has an office elsewhere and visits the Portsmouth office once or twice a week. The 0845 numbers for SS and LM go through to the directors' office or mobile. There are no other staff at present.
Borro (who are not themselves interested in marine loans) provide referrals to LM via email (one of which I saw).
The printout confirming the FCA Interim Permission (from April 2014) showed the categories applied for are
- Pawnbroking
- Other Secured Loans
- Second Charge Mortgage Lending
- Other Unsecured Lending
Lendy have not applied against the "Peer to Peer Lending" category as they do not feel it is applicable to their business model.
Lendy Marine
For each of the three (randomly chosen) loans
- 1983 Westerly Sealord
- 1999 Dufour 43
- 2008 Bayliner 285 CS
I've seen the pawn receipt, the valuation, the 3 way agreement (borrower, Lendy Ltd and the storage facility e.g. a marina), and insurance details noting Lendy's interest. The dates of all documents appear sensible in relation to the declared loan start date on the SS website, and the storage locations correspond with those noted on the SS website (e.g. boatyard on the south coast). The valuation reports appear comprehensive (tens of pages each) and the values correspond to the SS website listings.
I also asked about the 2013 Elan 320 which was repaid after 21 days but in this case was told the borrower had requested total confidentiality (even though I had signed a NDA with Lendy).
The superyacht and the high net worth investor behind the loan do appear to exist, and I saw some evidence of a large 6 figure sum changing hands, as well as the valuation of the yacht. Unfortunately this high net worth investor (who also funded one of the earlier smaller loans) has placed a fixed and floating legal charge on Lendy Ltd, details of which are in the public domain at Companies House. The implication of this is that if Lendy was to be wound up (I've not as yet thought through what other scenarios this might also apply to), this one high net worth individual would get every penny of their money back before the rest of us saw anything. Whilst given the current loan portfolio, the very low LTV of the superyacht mitigates against the risk of the security of the rest of the yachts being called upon to repay the high net worth individual, a fixed and floating charge is an open ended instrument that can cover any future lending activities of that individual with Lendy. With hindsight, Lendy accept the superyacht would have been better handled via a SPV not via Lendy Ltd itself. Early repayment of this loan is expected (but clearly not guaranteed) so this may only be a short term concern until the fixed and floating charge can be flagged as satisfied at Companies House.
One of the completed loans has required an asset sale - the borrower was open and informed LM before the end of the term that repayment would not be made. I saw evidence of two avenues explored in the (claimed successful) quest to find a buyer for the yacht. It's worth noting, however, that it was advertised as being 1 year newer than actually was the case, but Lendy claim the actual month/year would have been clear to the purchaser in the boat's documentation.
I've seen evidence that a loan set up fee is being routinely charged, and hence the stated APR on the LM (and LC) website (53.7%) is wrong as it excludes any fee (a serious breach of the Consumer Credit legislation). The "Loan Calculator" is similarly misleading.
As a marketing tool the LM (and LC) websites seem very amateurish, and contain very vague T&C's which don't describe the business model. My concern is the website probably puts off more potential borrowers than it convinces to follow through with an enquiry. Having both the news and twitter feeds dead for the last ten months doesn't help.
Saving Stream
I've seen emails covering the three testimonials currently on the website, two of which appear to originate from the named individuals. I've also seen evidence of an investor who transferred funds to Lendy in February 2013 in return for a monthly interest rate.
The subject of yacht photos remains contentious. Lendy believe that the use of actual asset photos even if redacted of boat name etc is dangerous on privacy grounds as the marina backdrop could allow identification by those who know the marina. Equally Lendy accept the current situation isn't really tenable either as there are no receipts available to validate the images as stock photos, nor is there written permission to use the photos. Stalemate - us lenders want redacted photos of the actual asset (which is what we are told we are getting in the T&C's) but Lendy are currently minded to go with "modified" internet images (but I'm not convinced they understand the image tagging technology underpinning camera images to do this reliably 100% of the time - a single slip could leave them open to legal action. Their suggestion of mirror imaging the photo so that it is "different" to the original illustrates the lack of technical understanding very clearly.)
The SS T&C's still contain mis-numbered references to other clauses; references to the word "saver" which the FCA consultation paper cautions against; inconsistencies on password disclosure; and both sections 5 & 17 contain irrelevant and confusing detail relating to borrowers (who aren't directly relevant to SS). One such clause references the fact that borrowers are charged a minimum of 30 days interest ... yet the 21 day loan proves the lenders don't benefit. Not great PR.
T&C 5.2.4 indicates that in the event that the asset turns out the be stolen / fake, SS will reimburse lenders. Presumably Lendy's expectation is that insurance covers this risk ... but what if it doesn't ? SS also indicated on this forum, that they would cover a shortfall on the sale of the asset. This is not in the T&C and so is not clear that this actually applies or the extent of it (capital ? interest ? ). It isn't immediately apparent if this is an insured (or indeed insurable) risk or not, and whether Lendy Ltd's own capital reserves are adequate to support this policy.
Although mentioned on the forum previously it is worth remembering that the borrower's loan term is 6 months (with no early repayment penalty), but the lenders loan term of "up to 7 months" is to provide a time margin for the statutory notice plus fire sale of the asset in the event of no repayment by the borrower. This should imply that most loans won't see much if any of the seventh month. It was stated verbally (but not in the T&C as far as I can see) that lenders would be repaid from Lendy funds at the 7 month mark if a sale hadn't been achieved. Again its not clear whether Lendy Ltd's own capital reserves are adequate to support this policy.
The T&C's fail to mention the processes that would be followed in the event of Lendy Ltd being wound up, and whether the body expected to carry this out have had any input into the lender records being created to confirm they are fit for purpose. Whilst the platform software appears to be creating a database of loan parts owned by each lender, if anything should happen to the two Lendy directors it is not clear to me the extent to which a third party could be expected to piece together the records. At present there does not appear to be a nominated body for this role, and hence it is very unlikely that this scenario has been "wargamed".
OFI's (Opportunities for improvement)
1. Undertake a thorough review of SS's T&C's & Privacy Policy to ensure the wording matches the business model exactly.
2. Document and agree a wind-up plan for Lendy Ltd with a nominated 3rd party.
3. Ensure the extent of the capital repayments covered by Lendy is unambiguous and is supportable by Lendy financially via adequate capital reserves
4. File Lendy Ltd first accounts with companies house / HMRC sooner rather than later.
5. Resolve the yacht photo dilemma
6. Consider paying lenders 30 days interest on loans repaid in the first 30 days
7. Review SS website login time out which seems too short
8. Correct LM/LC website APR and Loan Calculators {high priority)
9. Once the superyacht loan is redeemed, ensure the fixed and floating legal charge is flagged as satisfied at companies house asap.
10. Agree with legal advisers a better corporate structure for handling "superyacht" loans
11. Write a set of T&C's for the LM/LC websites that reflect the business model
12. Consider a major rewrite of LM/LC websites
13. Consider whether the FCA might throw a spanner in the works in relation to the trading name "Saving Stream"
Glossary
LC Lendy Classic
LM Lendy Marine
SS Saving Stream
Thanks for taking the time out to visit Portsmouth and for casting your knowledgeable eye over things.
