jhma
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Post by jhma on Feb 24, 2014 16:45:10 GMT
At least four loans on the AC site in past months (as far as I know) have been introduced to AC by firms that are active 'Feline' sponsors.
There's been a bit of discussion here in the past and on one of the other forums currently. The logic for promoting deals on multiple platforms seems perfectly reasonable.
But I wonder if some of these introducers themselves, or perhaps AC, could clarify their role in the AC loans. Amongst other things, the 'Feline' sponsors (in the TC business model) are expected to maintain an interest in monitoring the loan and some have certainly been involved in discussions re. distressed loans.
Is something similar expected of the introducer in the case of the AC loans, or will AC have sole responsibility for followup and monitoring beyond drawdown?
Thanks!
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Post by andrewholgate on Feb 24, 2014 17:31:07 GMT
Firstly can I say we live in a capitalist market that allows buyers and sellers to choose where they make a transaction. As a business owner myself, I will look to spread my risk by having multiple customers and suppliers, as would any other sensible business owner. The SME lending market is dominated by independent brokers who scour the market looking to match borrowers to lenders. Those that have experience in the P2P sector are known to most on here as their names come up on different platforms, and some of them even post on here. I know of one who currently has loans with us, FC, FK and then other providers such as Market Invoice; it's business and they will go to where they can get a deal done. If one of those brokers approaches AC with a deal that we can do then I am not going to turn the opportunity down. I'm then in a competitive scenario over cost, speed of drawdown, ability to structure a deal and a host of other factors. I do not know what relationship other platforms have with their brokers. They are private commercial agreements and I can only comment on my brokers. I can say from experience, it would be impossible to tie an independent broker to once source of lending. One, not every lender can do every deal. Two, it would be impossible to monitor. It would also be impossible for a lender who is approached to know where that person is in breach of contract elsewhere. Brokers are free to choose where they do business. For AC, the relationship with our brokers is very clear: - The broker introduces a deal to AC
- The broker is responsible for all information gathering and initial structuring
- AC then make a judgement on whether more DD is required (including site visits etc).
- In some cases, the broker is trusted enough to act for AC on site visits and to also provide an initial credit report.
- AC makes the final credit decision in house including pricing. At no time to external brokers make a credit decision on any loan that we list.
- AC prepares all the documentation and controls the drawdown process.
- AC manages the loan and any subsequent default procedures.
- On drawdown the broker is paid a pre-agreed fee that they have agreed directly with the borrower. This fee depends on the level of work the broker has done, and what the borrower is prepared to pay. AC makes it very clear in the documentation what that fee is.
To summarise, we do pay brokers as it is necessary to do so and is common practice in the market place. However, credit decisions, documentation and loan management are all in house with AC. AC works with many brokers, and will continue to do so.
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jhma
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Post by jhma on Feb 24, 2014 21:33:36 GMT
Andrew
Thanks for the clear explanation of the AC business relationship with your brokers, particularly the clarification that it is solely AC's role to manage the loan after draw-down.
Just to reiterate that in my post I did not question brokers dealing with multiple platforms as they see fit - as I stated, that is perfectly reasonable.
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oldgrumpy
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Post by oldgrumpy on Feb 24, 2014 21:35:12 GMT
Interesting informative summary describing the staus quo, thank you.  ed.... or even status quo ...(Hic!) |
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mikes1531
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Post by mikes1531 on Feb 24, 2014 22:04:00 GMT
- On drawdown the broker is paid a pre-agreed fee that they have agreed directly with the borrower. This fee depends on the level of work the broker has done, and what the borrower is prepared to pay. AC makes it very clear in the documentation what that fee is.
Thanks for the explanation of the role of brokers/introducers. When you say the fees are very clear in the documentation, are you referring to the documentation the borrower sees or the documentation the AC lenders see? If the latter, I must be blind because I cannot find this info in any of the credit reports of the four auctions currently open for bidding, so I'd appreciate it if you could point me in the right direction to find that info.
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Post by andrewholgate on Feb 25, 2014 6:41:47 GMT
- On drawdown the broker is paid a pre-agreed fee that they have agreed directly with the borrower. This fee depends on the level of work the broker has done, and what the borrower is prepared to pay. AC makes it very clear in the documentation what that fee is.
Thanks for the explanation of the role of brokers/introducers. When you say the fees are very clear in the documentation, are you referring to the documentation the borrower sees or the documentation the AC lenders see? If the latter, I must be blind because I cannot find this info in any of the credit reports of the four auctions currently open for bidding, so I'd appreciate it if you could point me in the right direction to find that info. It is agreed between AC, the borrower and the broker. That is a separate commercial relationship and possibly sensitive information so we do not disclose it to the lenders or on our website. Our fees for borrowers are competitive in the market place.
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