What's your SS %

Ha, very interesting. We actually own a load of domains. investup.eu investup.co.uk crowdisa.co innovativefinanceisa.co etc.

investup.co seemed to fit our plan for being a snazzy tech company with eventually not having geographic boundaries. Your feedback though makes me think we should prob stick to the .co.uk...

I guess that's what web-forwarding was made for 

Any cap on that? On the expensive side when the platform isn't doing any investment management. Looks cheap enough to a beginner but not those who have a decade or more of putting in the ISA max. For P2P paying 12% assuming no bad debt it's also 4.1% of the total return each year. On say £100,000 invested that's enough to cut the final value from £310,584 to £299,400. I'm sure they do good things but I'm not sure they are worth £11,184, an average of £1,118 a year over the ten years. Inflation ignored in these calculations.

It's even worse for lower paying platforms. The numbers are smaller but the cut being taken out of the whole return is larger.

There's also the very high risk level to consider. Fraud there could get at money in all platforms used. Since the most vital protection against loss in P2P is using different platforms so fraud at one can't cost all of your money, consolidating all of that access in one places goes back to having 100% of the money potentially losable to fraud. Really nasty and unwise for investors. It also makes InvestUP a prime target if it grwos to large size, because the amount of money available to be stolen could become larger than at any individual platform.

So far I've seen no useful discussion of mitigation measures that could protect investor money if InvestUP was compromised. Basic things like caps on daily flow rates out of platforms to InvestUP (and favouring platform to platform transfers not going via InvestUP when possible). For secondary market platforms, caps on secondary market sale value per day to slow money withdrawing rate. And some protection for investors that is pooled so that investor A who loses all of their money that was in cash at a platform has shared risk with investors B--Z who were invested, so all get protected. Or some platform or insurance protection for A. Add reports of amounts at each platform each day, reported by the platforms, not InvestUP, and compared to InvestUP's own reporting to ensure that they reconcile to detect some forms of diversion fraud. A gaping hole in those measures is money sent to InvestUP that could be diverted and not reported by either InvestUP or the platforms, just vanishing as it is paid in, with money taken from other investors used to provide the "new" money.

Long term I think it is unwise for InvestUP to seek or be granted permission to hold client money because of the traceability difficulties. Unless some solution independent of InvestUP that can do reliable tracking of money into and out of InvestUP to reconcile those money flows with the money reported by platforms.

Recognising that today InvestUP is probably entirely legitimate, but might not be, yet at any time could be compromised by fraudsters, how can the financial controls and reporting be designed to protect from fraud at the heart of the web of Investments at InvestUP?

Hi John334,

Our understanding is that this will not effect our model at all.

investUP’s fees are not charged for delivering fees and does not include any trail commission from underlying sites. The fees are an explicit platform fee for administration and technology associated with delivering the service. This is comparable to some of the online brokerages, for example TD Direct Investing which has an explicit platform fee of 0.35%. Our fees are essential administration fees and are explicit.

Cheers,

Dom

Hi Ablender,

Firstly you absolutely do not need to close any of your existing accounts. We create new accounts for you unless you request direct access in which case we uncouple the service.

You will have access to all loans from our partner sites. We are in the process of integrating several of the secondary markets and hopefully you will access to the first lot of these loans over the next few weeks/months.

The intention is to give you access to the same opportunities, as you would get by going direct. However, as you can imagine some of the integrations do take time. On the flip-side UP will only get better with time!

We are also looking at ways to link up your existing accounts, although this is still in development and is to specific to each of our partner sites.

Best,

Dom

Ps. I’m off to Web Summit in Dublin in the morning – if I’m slightly delayed with any answers I apologise now!

Yes, but please do drop me a note to remind me. I agree that you've huge potential! That's part of why I put in the time to give you possibly tough questions to answer. If yoou didn't have an interesting product I wouldn't be interested enough to do it.

So, lets consider one of the short term nasty events that banks have to deal with in their security designs:

On a Saturday of a bank holiday weekend a person at your business with signing authority who sadly has developed gambling problems (or whatever else you care to substitute, from drugs to whatever) willingly works with a criminal gang that kidnaps the wife and children of another person with signing authority and your database administrator. How effective will your controls be with all three individuals using the long weekend and following work day to try to subvert them and divert as much money as possible to an account controlled by fraudsters?

You have a custodian. How does the custodian verify that the account they are told to send money to is really the account of a customer? Naturally there is the potential for your DBA to change all records about all customers in your own databases so that is not a reliable control method, unless it is not actually possible to get access to it - and someone, somehow, does normally have access and can be compromised. And of course the signatories can do many things potentially to facilitate moving money around.