gon
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Post by gon on Mar 17, 2015 12:18:26 GMT
Given the amount of loans that are presenting late payments, surely AC should make provision within their Loan Agreements that commit borrowers to setting up standing orders for regular monthly payments. I appreciate AC have wording in their loan agreements to say they can claim default interest for any late payments however, this does not seem to happen unless a borrower is extremely late with their payment. Therefore this seems to have created the idea that borrowers can happily go off on holiday, with nobody else able to make the due payment in their absence, and simply pay it when they get back, even if its a number of days late. Other borrowers have been persistent offenders month after month, just a few days late each time, but nevertheless they are late payments and should not be tolerated when it is quite simple for a standing order to be put into place from the start. Do others agree that AC should tighten up in this respect?
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Post by batchoy on Mar 17, 2015 12:24:51 GMT
The preference should be for direct debits over standing orders, though that would mean AC would need to remember to do things on time.
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ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Mar 17, 2015 12:59:30 GMT
It's been suggested many times before in my year with AC; whenever I've signed agreements to make regular monthly payments I haven't been given the option of not setting up a standing order, so it just seems like standard practice everywhere else. I think chris has mentioned that he will have the means available to resolve this soon, unless I misunderstood. |
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jonno
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nil satis nisi optimum
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Post by jonno on Mar 17, 2015 13:00:05 GMT
I'm honestly not trying to sound like a smarta*se, but I was banging on about this 12 months ago.I don't think I ever got a satisfactory response back then.
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bugs4me
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Post by bugs4me on Mar 17, 2015 13:36:59 GMT
The preference should be for direct debits over standing orders, though that would mean AC would need to remember to do things on time. AFAIK, AC do not have DD facilities. I stand to be corrected.
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Post by chris on Mar 17, 2015 13:54:18 GMT
The preference should be for direct debits over standing orders, though that would mean AC would need to remember to do things on time. AFAIK, AC do not have DD facilities. I stand to be corrected. Direct debits require you to persuade a company, like your bank, to act as your sponsor, require you to post a bond with them to cover chargebacks, and have complications around client money rules. For example if we request a payment the funds don't arrive for 4 - 6 days, which would be the minimum time before we could credit lenders, but then there is a chargeback period. I have no idea how that chargeback period would then interact with the client money rules as we are only supposed to credit cleared funds. If funds can be reclaimed then I think we'd either need to reserve those funds from lenders during that period or cover the difference from our own funds which would be impractically expensive. The above reflects my understanding anyway, but hopefully you'll agree DD has some severe hurdles. I know it is being explored as an option elsewhere in the business but my understanding is that it's a very low priority.
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baz657
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Post by baz657 on Mar 17, 2015 14:28:51 GMT
I'm amazed and astounded that the infra-structure for getting loan repayments in and on time is not a necessity and only a lowly item in a priority queue.
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mikes1531
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Post by mikes1531 on Mar 17, 2015 17:08:35 GMT
... if we request a payment the funds don't arrive for 4 - 6 days, which would be the minimum time before we could credit lenders... This shouldn't be an issue. AIUI -- and I'm certainly no expert -- the date a DD is charged to the payer and credited to the recipient is a specific number of days after the request is put into the system. (The 4-6 days chris mentioned probably depends on whether there's a weekend involved.) So the company initiating the DD starts with the day they want to receive the money, counts backward the appropriate number of days, and works out when they need to submit their request. That's certainly how Zopa do it (and a lender can see when the requests have been sumitted.) ... then there is a chargeback period. I don't know enough to make a reliable comment, but I would say that it doesn't seem to bother other companies. It may just be the result of different interpretations of the client money rules, or use of working capital -- which AC should have plenty of after the current funding round. 
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Post by chris on Mar 17, 2015 17:13:14 GMT
... then there is a chargeback period. I don't know enough to make a reliable comment, but I would say that it doesn't seem to bother other companies. It may just be the result of different interpretations of the client money rules, or use of working capital -- which AC should have plenty of after the current funding round. Just because a competitor of ours does something that does not mean their advice is correct nor that the FCA will not sanction them down the road. Everything we're doing has to be sanctioned by our own compliance officer and the board of directors. The client money rules are not something to be trifled with. Working capital is one thing but if we have a £1.5m loan repayment, for example, then that's a very different prospect cash wise than a £5k payment. Our loans don't typically follow the same simple profile of those on other platforms and whatever solution we come up with needs to work across the board.
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Post by chris on Mar 17, 2015 17:14:59 GMT
I'm amazed and astounded that the infra-structure for getting loan repayments in and on time is not a necessity and only a lowly item in a priority queue. Who said that!? With the automated bank feed project that we're actively working on now we can fully automate borrower repayments with no manual intervention required unless there is a problem. Just because direct debits aren't yet a solution doesn't mean we don't take borrower repayments seriously.
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Post by batchoy on Mar 17, 2015 17:36:52 GMT
I don't know enough to make a reliable comment, but I would say that it doesn't seem to bother other companies. It may just be the result of different interpretations of the client money rules, or use of working capital -- which AC should have plenty of after the current funding round. Just because a competitor of ours does something that does not mean their advice is correct nor that the FCA will not sanction them down the road. Everything we're doing has to be sanctioned by our own compliance officer and the board of directors. The client money rules are not something to be trifled with. Working capital is one thing but if we have a £1.5m loan repayment, for example, then that's a very different prospect cash wise than a £5k payment. Our loans don't typically follow the same simple profile of those on other platforms and whatever solution we come up with needs to work across the board. I don't see what the problem is, other platforms seem to get around the problem by having a 7 day period between the payment date for the borrower and the date that the payment is actually credited to lenders in order to ensure the funds are fully cleared before being distributed, this is no different to the 7 day grace period that AC offers to, and is regularly abused by borrowers under the current payment process. If the clearing times are such an issue, is AC similarly unable to accept payments from borrowers by cheque given that there is a 5 working day clearing period during which credited funds may be clawed back?
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Post by chris on Mar 17, 2015 17:39:36 GMT
Just because a competitor of ours does something that does not mean their advice is correct nor that the FCA will not sanction them down the road. Everything we're doing has to be sanctioned by our own compliance officer and the board of directors. The client money rules are not something to be trifled with. Working capital is one thing but if we have a £1.5m loan repayment, for example, then that's a very different prospect cash wise than a £5k payment. Our loans don't typically follow the same simple profile of those on other platforms and whatever solution we come up with needs to work across the board. I don't see what the problem is, other platforms seem to get around the problem by having a 7 day period between the payment date for the borrower and the date that the payment is actually credited to lenders in order to ensure the funds are fully cleared before being distributed, this is no different to the 7 day grace period that AC offers to, and is regularly abused by borrowers under the current payment process. If the clearing times are such an issue, is AC similarly unable to accept payments from borrowers by cheque given that there is a 5 working day clearing period during which credited funds may be clawed back? If they pay by cheque then yes we need cleared funds - no idea if this has ever happened though as I'm not part of that process day to day. If lenders are happy with there being a 7 day delay before they receive payment from a borrower then sure we can implement direct debits. I wouldn't have thought that would be what lenders wanted though? With standing orders and the automated bank feed we'd be aiming for distribution to lenders within 1 hour of funds being received.
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sl75
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Post by sl75 on Mar 17, 2015 17:41:22 GMT
... but then there is a chargeback period. I have no idea how that chargeback period would then interact with the client money rules as we are only supposed to credit cleared funds. If funds can be reclaimed then I think we'd either need to reserve those funds from lenders during that period or cover the difference from our own funds which would be impractically expensive. Presumably this would be handled in much the same way as if a regular bank transfer, standing order, or similar were to be reversed several days (or even weeks!) after you thought the payment had "cleared". Direct Debits make the reversal of transactions more likely (as under the terms of the Direct Debit guarantee, they can be reversed even under circumstances where nothing "suspicious" was going on), but even under the existing system, a provider will need to have systems in place to deal with transactions being reversed after the provider thought they'd "cleared". It should be harder for a fraudster to intentionally trigger this for an organisation with KYC, AML, fraud, etc. checks, so the risk would be substantially mitigated, but it never goes away completely, and sooner or later AC will have to deal with a transaction that seemed to have cleared being subsequently reversed. Although not familiar with the detail of how client funds are handled, I would expect that an organisation handling significant volumes of transactions into and out of a client account would have a separate "receiving account" and "holding account", so that if any incoming transactions are reversed, only the "receiving account" is at risk. If the organisation themselves maintains a "float" in the receiving account, such a structure also provides an obvious solution to the "debit card problem" (by transferring funds into the holding account as soon as a debit card transaction is authorised), which I would assume is the one used by other organisations providing liquid funds the moment a card payment is authorised.
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sl75
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Post by sl75 on Mar 17, 2015 17:44:05 GMT
If lenders are happy with there being a 7 day delay before they receive payment from a borrower then sure we can implement direct debits. I wouldn't have thought that would be what lenders wanted though? With standing orders and the automated bank feed we'd be aiming for distribution to lenders within 1 hour of funds being received.  Based on what was described before about the clearing cycle for Direct Debits, the funds are cleared 1 working day after the due date (and the request submitted to the banking system 3 working days BEFORE the due date). Why would an additional 7 day delay be necessary?
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mikes1531
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Post by mikes1531 on Mar 17, 2015 18:21:55 GMT
Working capital is one thing but if we have a £1.5m loan repayment, for example, then that's a very different prospect cash wise than a £5k payment. Our loans don't typically follow the same simple profile of those on other platforms and whatever solution we come up with needs to work across the board. : I don't think anyone ever has suggested using DDs to collect bullet payments due at loan maturity. Payments that large are a different situation entirely, and I'd expect them to be handled separately. And most likely via CHAPS, which should provide same-day cleared funds. (Are CHAPS payments subject to chargebacks?) The issue here is the regular monthly payments, and I wouldn't have thought those would require an enormous amount of working capital to get past the chargeback issue for them.
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