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Post by chris on Oct 30, 2015 13:07:28 GMT
We have interim permissions like all platforms. No one is fully authorised yet. As an aside I am aware of several companies with full permission.
Happy to stand corrected. I was under the impression that all established platforms who were operating on interim permissions had their submission window for applying full permissions closing today and that it would be a further six to twelve months before we could expect to become fully authorised. I'm sure my information is wrong but I'd be interested to know which platforms are now operating with full permission. Could you list any?
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Post by chris on Oct 30, 2015 13:33:23 GMT
We have interim permissions like all platforms. No one is fully authorised yet. As an aside I am aware of several companies with full permission.
Out of curiosity I just checked every company on the homepage of the forum (not in the "More" section) and they all operate on interim permissions. Which leaves me more curious as to which platform you meant.
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Post by lb on Oct 30, 2015 14:21:17 GMT
Chris - I am definitely NOT suggesting AC are doing anything wrong and I certainly don't think you are.
The part in bold - is this for real? Has it ever happened?
If I have £5,000 invested in GEIA (for example) are you saying I would have the right to take over my part of any loan that may be in default? How on earth would that work in practice if you have 500 other investors in the loan? Also, if £20 of my money is withdrawn and replaced by Investor #501, is the loan agreement amended? I am sure that what actually happens is the loan agreement is between borrower and AC - and AC hold it in trust for all investors and have the right to take the action they consider appropriate for all investors? I'll have to caveat this with reminding that my expertise is IT not the regulatory aspects of the operation but my understanding is that this is the case as it's a legal requirement. It should be covered in our terms. Regulatory expert or not, surely you appreciate that this is not workable. Therefore it cannot possibly be how AC operates.
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Post by easteregg on Oct 30, 2015 14:23:19 GMT
As an aside I am aware of several companies with full permission.
Out of curiosity I just checked every company on the homepage of the forum (not in the "More" section) and they all operate on interim permissions. Which leaves me more curious as to which platform you meant. Sorry if I'm dragging this off on a tangent. There are several P2P companies operating with full permission. These are all next generation platforms and include Crowd for Angels, CrowdCube, Crowd2Fund, Crowdstacker and Simple Backing. I note that while these have full permissions, most don't actually have the "p2p lending" permission! For full information please see www.p2pmoney.co.uk/companies.htm#registrations.
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Post by chris on Oct 30, 2015 14:32:08 GMT
Out of curiosity I just checked every company on the homepage of the forum (not in the "More" section) and they all operate on interim permissions. Which leaves me more curious as to which platform you meant. Sorry if I'm dragging this off on a tangent. There are several P2P companies operating with full permission. These are all next generation platforms and include Crowd for Angels, CrowdCube, Crowd2Fund, Crowdstacker and Simple Backing. I note that while these have full permissions, most don't actually have the "p2p lending" permission! For full information please see www.p2pmoney.co.uk/companies.htm#registrations. Apologies I thought we were talking about lending platforms as it was within the context of A36H agreements, which none of those platforms have permission to do. Simple Backing is also operating on interim permissions according to the FCA register.
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Post by chris on Oct 30, 2015 14:33:34 GMT
I'll have to caveat this with reminding that my expertise is IT not the regulatory aspects of the operation but my understanding is that this is the case as it's a legal requirement. It should be covered in our terms. Regulatory expert or not, surely you appreciate that this is not workable. Therefore it cannot possibly be how AC operates. Why would it not be workable? Sure it's probably impractical for an individual to take over their slice of a loan and operate it but it is the lender's right to do so (as I understand it).
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pikestaff
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Post by pikestaff on Oct 30, 2015 15:27:28 GMT
Regulatory expert or not, surely you appreciate that this is not workable. Therefore it cannot possibly be how AC operates. Why would it not be workable? Sure it's probably impractical for an individual to take over their slice of a loan and operate it but it is the lender's right to do so (as I understand it). Looking at the Ts&Cs, I think you are mistaken on this one. Paragraph 11.3: "Each Lending Member agrees that it will not take any enforcement action or commence any process against any Borrower in its own name but will act only through the agent or the security trustee in accordance with these Terms."You might possibly be thinking of paragraph 14.3: "Once a Loan has been advanced, each Lending Syndicate Member is entitled to exercise full day-to-day control over its rights under the Loan and the Security Documents through the mechanisms set out in paragraphs 11, 12 and 13 of these Terms." However, the mechanisms set out in the referenced paragraphs tightly circumscribe the exercise of those rights. Alternatively, you might be thinking of paragraphs 11.6 and 11.7, which give lenders the right to replace the Assetz Agent and Trustee. However, this requires such a large supermajority that it will never happen: "...Syndicate Members holding not less than 90% by value of the Loans outstanding at that time across the Network..." That's not a 90% majority of those voting, it's 90% of the total!
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Post by chris on Oct 30, 2015 15:31:25 GMT
Why would it not be workable? Sure it's probably impractical for an individual to take over their slice of a loan and operate it but it is the lender's right to do so (as I understand it). Looking at the Ts&Cs, I think you are mistaken on this one. Paragraph 11.3: "Each Lending Member agrees that it will not take any enforcement action or commence any process against any Borrower in its own name but will act only through the agent or the security trustee in accordance with these Terms."You might possibly be thinking of paragraph 14.3: "Once a Loan has been advanced, each Lending Syndicate Member is entitled to exercise full day-to-day control over its rights under the Loan and the Security Documents through the mechanisms set out in paragraphs 11, 12 and 13 of these Terms." However, the mechanisms set out in the referenced paragraphs tightly circumscribe the exercise of those rights. Alternatively, you might be thinking of paragraphs 11.6 and 11.7, which give lenders the right to replace the Assetz Agent and Trustee. However, this requires such a large supermajority that it will never happen: "...Syndicate Members holding not less than 90% by value of the Loans outstanding at that time across the Network..." That's not a 90% majority of those voting, it's 90% of the total! I freely admit I could be wrong, and it could be that the scenario I described could be in the event of the platform ceasing to operate or the supermajority that you lay out.
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bigfoot12
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Post by bigfoot12 on Oct 30, 2015 15:52:14 GMT
Out of curiosity I just checked every company on the homepage of the forum (not in the "More" section) and they all operate on interim permissions. Which leaves me more curious as to which platform you meant. Sorry if I'm dragging this off on a tangent. There are several P2P companies operating with full permission. These are all next generation platforms and include Crowd for Angels, CrowdCube, Crowd2Fund, Crowdstacker and Simple Backing. I note that while these have full permissions, most don't actually have the "p2p lending" permission! For full information please see www.p2pmoney.co.uk/companies.htm#registrations. If I remember correctly the equity type platforms were regulated from the outset.
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james
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Post by james on Oct 30, 2015 16:00:59 GMT
Article 36 as currently drafted ought to exclude every platform we know of. There is not one platform I know of where the investors on site are actually lending to a borrower directly. There is no charge/loan agreement in their name that is merely 'arranged' by an agent. The agent is the lender of record and the investors are beneficiaries.
Is Wellesley P2P? You select a term and rate - and have no control over to whom, in what proportions, or what security your money is loaned or what action is taken on defaults. The same for RS, Z and many others. How can any of this possibly be Article 36. How is this different to what wisealpha do (for example) - or how is it different to buying a 5 year bond which is apparently 'investing' and not 'lending'. If you haven't done it yet you really should follow my link and scroll down to 36H then read what it says. Zopa is clearly P2P within the 36H definition and I expect that RateSetter is as well. Undoubtedly others where I'm just not sufficiently certain of the terms to mention them. 36H doesn't require no servicing, it requires that the platform be the loan broker that introduces the ultimate borrower to the ultimate lender so that they can have a loan contract directly between them. The platform is perfectly free to do things like managing payments, debt collection and security on behalf of the parties.
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james
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Post by james on Oct 30, 2015 16:37:10 GMT
I have a compliance officer involved in every conversation on new developments and changes to the platform who repeatedly tells us whether what we're planning is or is not A36H compliant to make sure we stay on the right side of the law. Investors have full say in how they manage their own loan as required, from voting on block action to being able to take over their part of the loan as per the loan agreement, terms, and law. At all times we can produce a list of loan agreements between lenders and borrowers. If we were knowingly operating outside A36H then we would be carrying out regulated business without appropriate authorisation, something spend a lot of time, effort and money on making sure is not the case. Say a platform had ultimate lenders and at its will changed the loans that the ultimate lenders were using arbitrarily. I would then initially have the impression that the platform is actually operating in a manner more consistent with being a collective investment manager than with what I associate with being peer to peer. A collective investment manager like a fund has the general property that it can generally change what its investors are invested in at any time so that the investors don't generally know or have any direct say in what they are invested in. If a platform reassigns lenders to ultimate borrowers whenever it wants to without some specific event like a loan term ending then that looks like collective investment. If the loan agreements were crafted to be one hour, day or month agreement to facilitate moving investments between lenders by changing loan agreements and were not pawn or payday lending then that also looks like collective investment, but structured with care to exploit a regulatory loophole. Yet it's entirely possible that if I looked at the details of how a specific platform operates I might conclude that it is something that I think is P2P and should be treated as such. I do have concerns that if the ultimate things owned by investors are being arbitrarily changed by a platform without some key loan contract detail like the loan ending, on the face of it it has more of the character of investment management of a collective investment. In such circumstances and given what I believe to be the original purpose of 36H I'd perhaps be initially inclined to modify 36H to specifically prohibit rapidly changing loan contracts from being 36H agreements based on the character that they more resemble collective investment management than loan broking. I simply don't know of any traditionally definable loan brokerage business that can arbitrarily decide to change the loans its borrowers and lenders are involved in at its whim. Loan broking is in essence an introducer role, not one where loan contracts are swapped freely as desired by the broker. Yet that may not serve the needs of what I believe to be properly definable as P2P and it's entirely possible that I might decide that I think a particular business is actually P2P and that 36H should be modified to ensure that it falls within 36H even if it doesn't today. It's likely that I would use the ability of a platform to arbitrarily reassign investments to lenders at its whim whether using loan assignment or short term loan agreements as the key deciding criteria between P2P or collective investment. This is in part because I believe that a traditional investment house could restructure its business so its investors have direct share ownership via a trust structure in the underlying companies or bonds, hence magically becoming what might be considered to be P2P. I'm not sufficiently familiar with Assetz to have any view specifically on whether Assetz and how it operates is or is not P2P, 36H or both, nor on whether it should be, though I do trust that Assetz has taken great care to be definable as 36H as 36H exists today.
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