nick
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Post by nick on Feb 1, 2016 12:15:27 GMT
Whilst obtaining full FCA authorisation would be welcome, I wouldn't place to much reliance on it. It is particularly telling that P2P platforms are/will not be covered by the Financial Services Compensation Scheme that covers most other financial service companies - not a big vote of confidence that their light touch regulation will prevent future material platform failures/client losses.......... The FSCS is funded by IFA's out of their commission. You can't really expect them to fund p2p losses when they don't make any commission. So this does not impact confidence. You are right that the FSCS is funded by levies on firms authorised by PRA and the FCA. However, the point I was attempting to make is that the FCA made a conscious decision not to include P2P platforms within the FSCS scheme (understanding that if it was included then they would be levied like all others). The FCA chose not to include P2P platforms within the scope of FSCS as it deemed that this level of regulation would be disproportionate and unnecessary at that time, the implication being that the regulatory oversight is a lot lower than most other regulated business which are captured under FSCS. This was not an unreasonable position at the time given P2P platform had only just started to be regulated at all. The FCA is due to review this decision later this year as part of their broader review of the regulatory framework. I for one hope that the P2P is brought into the scope of FSCS as I believe it would need to significantly more confidence that investments and client money held by platforms would be protected up to certain limited in the event of platform failure for whatever reason.
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nick
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Post by nick on Feb 1, 2016 12:36:45 GMT
Whilst obtaining full FCA authorisation would be welcome, I wouldn't place to much reliance on it. It is particularly telling that P2P platforms are/will not be covered by the Financial Services Compensation Scheme that covers most other financial service companies - not a big vote of confidence that their light touch regulation will prevent future material platform failures/client losses.......... What the FCA authorisation will do is provide an in depth review of each business and their operating practices. Platforms will have to demonstrate compliance with the regulations and will face detailed quizzing by the FCA about their operating practices, processes, and key members of staff. In theory this should weed out any dodgy or naive platforms who are not properly protecting investors be it through client money breaches, improper loan contracts, insufficient funds to continue operating in the long term, flawed legal procedures, moral hazard within operating practices, correct corporate governance, and so on. Time will tell how complete and thorough it is, and you can never fully rule out wilful fraud, although I'm hopeful the FCA will be successful in this and that the industry as a whole will be left stronger afterwards. As webwiz says the FSCS is something else entirely. On reflection, my post was too dismissive of the current regulatory oversight which does helps to reduce the risk of unscrupulous operators and poor managed/operated platforms. The points you make are very valid and the general move towards mainstream stream FCA authorisation and oversight is welcome and I believe will benefit the industry and support its future growth.
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webwiz
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Post by webwiz on Feb 1, 2016 13:20:51 GMT
The FSCS is funded by IFA's out of their commission. You can't really expect them to fund p2p losses when they don't make any commission. So this does not impact confidence. You are right that the FSCS is funded by levies on firms authorised by PRA and the FCA. However, the point I was attempting to make is that the FCA made a conscious decision not to include P2P platforms within the FSCS scheme (understanding that if it was included then they would be levied like all others). The FCA chose not to include P2P platforms within the scope of FSCS as it deemed that this level of regulation would be disproportionate and unnecessary at that time, the implication being that the regulatory oversight is a lot lower than most other regulated business which are captured under FSCS. This was not an unreasonable position at the time given P2P platform had only just started to be regulated at all. The FCA is due to review this decision later this year as part of their broader review of the regulatory framework. I for one hope that the P2P is brought into the scope of FSCS as I believe it would need to significantly more confidence that investments and client money held by platforms would be protected up to certain limited in the event of platform failure for whatever reason. Really? I did not know that - I thought it was only funded by intermediaries. Probably because they are the ones who winge the most. If you are right then your point is valid and I share your hope.
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sqh
Member of DD Central
Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Feb 1, 2016 13:33:00 GMT
The FCA are retrospective, and of no protection to existing lenders.
Here's a classic example.
According to the latest General Update the borrower of PBL049 has been advanced an extra £150k, without lender consultation and from an unknown source.
I don't consider this a problem, but I doubt if it meets FCA rules. If the FCA punish the platform then existing lenders are needlessly put at risk. Of course, SS may have cleared this with the FCA.
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webwiz
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Post by webwiz on Feb 1, 2016 13:37:39 GMT
The FCA are retrospective, and of no protection to existing lenders.Here's a classic example. According to the latest General Update the borrower of PBL049 has been advanced an extra £150k, without lender consultation and from an unknown source. I don't consider this a problem, but I doubt if it meets FCA rules. If the FCA punish the platform then existing lenders are needlessly put at risk. Of course, SS may have cleared this with the FCA. Maybe PBL049 is still on the old T&C so is a loan from Lendy?
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Feb 1, 2016 14:30:35 GMT
Never any indication it isnt
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sqh
Member of DD Central
Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Feb 1, 2016 14:58:38 GMT
The FCA are retrospective, and of no protection to existing lenders.Here's a classic example. According to the latest General Update the borrower of PBL049 has been advanced an extra £150k, without lender consultation and from an unknown source. I don't consider this a problem, but I doubt if it meets FCA rules. If the FCA punish the platform then existing lenders are needlessly put at risk. Of course, SS may have cleared this with the FCA. Maybe PBL049 is still on the old T&C so is a loan from Lendy? I think PBL049 is still on the old T&C, but the FCA regulate Lendy. Lending their money without informing lenders can't be right.
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webwiz
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Post by webwiz on Feb 1, 2016 18:00:29 GMT
Maybe PBL049 is still on the old T&C so is a loan from Lendy? I think PBL049 is still on the old T&C, but the FCA regulate Lendy. Lending their money without informing lenders can't be right. But under the old T&C isn't it Lendy's own money they are lending? I can't see how it can be ours. How could they have they got hold of our money without inviting new funds? What am I missing?
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sqh
Member of DD Central
Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Feb 1, 2016 19:41:39 GMT
I think PBL049 is still on the old T&C, but the FCA regulate Lendy. Lending their money without informing lenders can't be right. But under the old T&C isn't it Lendy's own money they are lending? I can't see how it can be ours. How could they have they got hold of our money without inviting new funds? What am I missing? I have full confidence in Lendy and SS, but I just don't think the FCA will consider it appropriate. Lendy have been given FCA permission to run a P2P platform. That doesn't mean they can use our/their money for anything they choose. If Lendy offer loans to other borrowers without your knowledge, wouldn't you be concerned. That's why we have regulation.
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ablender
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Post by ablender on Feb 1, 2016 20:00:07 GMT
I think that Lendy is still authorised and issues loans on its own accord. If a loan was issued by Lendy and we were offered the opportunity to share in the gains by lending to Lendy, I do not see how we can claim any rights if Lendy chooses to lend more money out of its own pocket. After all Lendy is our borrower not the end customer. Thus if Lendy is ready to guarantee the amount they borrowed from us, they are free to do whatever they want with the rest of their funds.
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Post by Deleted on Feb 1, 2016 20:33:35 GMT
I think that Lendy is still authorised and issues loans on its own accord. If a loan was issued by Lendy and we were offered the opportunity to share in the gains by lending to Lendy, I do not see how we can claim any rights if Lendy chooses to lend more money out of its own pocket. After all Lendy is our borrower not the end customer. Thus if Lendy is ready to guarantee the amount they borrowed from us, they are free to do whatever they want with the rest of their funds. To be honest by lending extra money they change the LTV (as they lend additional cash against the same security). So, given a fixed and constant security value, in case of default the recovery will be poorer for everyone (in percentage). They should really have issued an extra (separate) loan, giving a different loan number and repaying the previous at the same time. There would have been no trouble whatsoever to re-raise the money and that would have been correct. Changing the terms of a loan (or its security) on the go without authorisation from lenders is not a correct way of acting.
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webwiz
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Post by webwiz on Feb 1, 2016 21:09:58 GMT
If they have really done that then I would agree with you. However I assume that the first loan would have priority in the event of a default. But I am not a lawyer and I have not seen the documents.
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Greenwood2
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Post by Greenwood2 on Feb 6, 2016 19:57:48 GMT
So how is application for full FCA approval going, if it has to be done by April?
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james
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Post by james on Feb 15, 2016 19:59:10 GMT
Really? I did not know that - I thought it was only funded by intermediaries. Probably because they are the ones who winge the most. Yes, really, take a look at the FSCS funding source description. For large failures the levies are used to repay a loan from the BoE.
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Post by sunspot on Feb 16, 2016 2:00:14 GMT
They can spend their own money more or less as they wish, declaring dividends, investing in new desks, or helping clients, etc.
There are rules with regard to governance of any company, for instance Conrad Black famously ended up in jail for spending money that wasn't his, and Sepp Blatter is in trouble for payments made to Michel Platini. However, when money changes hands in plain sight, you can generally assume no rules have been broken.
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