james
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Post by james on Feb 3, 2016 21:00:55 GMT
Bondora case proves that FCA regulation is will not save investors. Already a fact. Well, if you consider what should have been a very easy thing to do: announce no fees on the secondary market from a certain date late last year, continue to charge them for existing offers unless people cancel and relist, what an FCA regulated firm should do is either really not charge in all cases or apologise and proactively refund for all charges after the date once the last existing offer expired (they last up to 30 days). What Bondora has done so far is do it just or those who contacted support and refused initially on at least one of those cases. Bondora has submitted a full application but is currently only operating with interim permission. They have a fair bit of culture work to do to be fully authorised in my opinion. Because of things like misleading investment descriptions, notably the "young professionals" loans that turned out to be for fitters, shop assistants and other non-professionals under 25, the way they exposed investors to the very high risks and extreme default rates in new markets and the way they present data relating to defaults in an overly positive way to current investors I have reservations about whether the firm should be authorised at all.
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registerme
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Post by registerme on Feb 3, 2016 21:30:50 GMT
I suspect we all have ideas about which firms should pass, which firms might pass, and which firms shouldn't pass. My opinions concerning the value of FCA regulation will be entirely dependent on whether or not my ideas meet FCA reality with any accuracy  . |
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jjc
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Post by jjc on Feb 4, 2016 0:42:08 GMT
A question perhaps pikestaff james chris or others in the know could help clarify - does the FCA process contemplate a 2nd bite at the full authorisation cherry for platforms? Ie if you don't get it when you're first called up (timing of which seems to be unclear for all platforms right now AIUI) can the FCA send the platform away to do their homework / make necessary adjustments & come back for a 2nd pop? If so, will the public/lenders be notified the 1st pop didn't work out? Is a 3rd/4th pop possible? Fairly fundamental issues for guaging platform compliance risk you'd have thought, am surprised this hasn't been discussed more (& platforms clarified their understanding of the process). Any comments westonkevRS wellesleyco andrewholgate ablrateandy savingstream fundingsecure et al? |
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james
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Post by james on Feb 4, 2016 1:00:42 GMT
The FCA would work with a firm during the authorisation process to get any changes that it wants, or decide that a firm is not suitable if say it is uncooperative in making required changes.
Things like lying to investors about investment properties and risks - the Bondora young professional case - would perhaps be a tough one to overcome without significant management changes and demonstration of actual culture change. The Bondora secondary market charging issue would seem to demonstrate a lack of culture change as of late last year.
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registerme
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Post by registerme on Feb 4, 2016 1:26:05 GMT
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jjc
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Post by jjc on Feb 4, 2016 2:46:41 GMT
Thanks james. So it sounds like there’s no 2nd bite (just a potentially very long 1st chew) with no long-stop date pre-defined? Find that troubling, as an investor a long chew could be ok (ish) but I’d like to know when the deadline for swallow (or spit-out) is – otherwise I may be dieting on unhealthy (maybe toxic?) fodder. Not from world of finance & been out of UK for 2 decades so thin feel for how FCA works, hence the ignorance. registerme – late & bleary-eyed but couldn’t see any dates, maybe wrong thread? |
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Post by ablrateandy on Feb 4, 2016 6:42:12 GMT
I'm not looking after our application but my twopenneth would be in line with james's. It would be wrong to think of the FCA as being a body who simply yes/no things. They will be very reticent to wind down a business which could make the necessary changes to meet their standards. imho it is a very big job and they are likely to help most people through at a "basic" standard and then tighten up going forwards, raising the hurdle each time. For them to actively want to shut someone down I think that there would have to be evidence of fraud or utter and irredeemable incompetence. |
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Post by chris on Feb 4, 2016 7:22:57 GMT
I'm not looking after our application but my twopenneth would be in line with james 's. It would be wrong to think of the FCA as being a body who simply yes/no things. They will be very reticent to wind down a business which could make the necessary changes to meet their standards. imho it is a very big job and they are likely to help most people through at a "basic" standard and then tighten up going forwards, raising the hurdle each time. For them to actively want to shut someone down I think that there would have to be evidence of fraud or utter and irredeemable incompetence. Likewise I'm not the expert in this field but for the most part I would expect this to be the case. However we have been internally warned by our compliance officer that for more severe breaches, such as if the FCA thought we were doing something badly wrong with the client money rules or our loans weren't article 36H compliant, they would be well within their power to shut us down there and then and keep us offline until we could demonstrate we were compliant. I don't know the likelihood of that approach coming to pass but the danger is real enough that we continue to be very conservative in all our implementations. I would guess it would come down to whether the FCA felt lenders were at risk. But as I say I'm not the expert in this.
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Post by andrewholgate on Feb 4, 2016 13:36:37 GMT
The FCA has the power to close down any platform that it felt was in breach of the regulations. For minor breaches it will work with the platform to correct the position. For major breaches, they can and will close down a platform.
The FCA are concerned in two major areas; protection of the consumers rights and the use of client money. The latter is coming into stark focus following the Trust Buddy collapse and also a recent case in China. If any platform is found wanting the will shut them down.
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oldgrumpy
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Post by oldgrumpy on Feb 9, 2016 17:18:58 GMT
Full authorisation scheduled well into 2017 for some platforms? "This is because, as Martin Smulian, Head of Legal and Compliance at FundingKnight, told our December seminar, it is taking four months or more for a platform’s application to be allocated a case officer and it is only once that has happened that the clock starts on the FCA’s one-year deadline to process it. Plenty of applicants could end up waiting well into 2017 for the FCA to finish the job." www.informedfunding.com/networks/107/ifeblog_thread.html?threadid=550 |
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