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Post by easteregg on Mar 17, 2014 22:22:45 GMT
I read with some concern the new T&C's:
So lenders could suffer additional costs of up to 2%, as well as only receiving funds quarterly. While the failing of a platform would be disastrous for the industry, lenders also having to fund this through an additional fee would be unwelcome.
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Post by yorkshireman on Mar 17, 2014 22:52:19 GMT
I read with some concern the new T&C's: So lenders could suffer additional costs of up to 2%, as well as only receiving funds quarterly. While the failing of a platform would be disastrous for the industry, lenders also having to fund this through an additional fee would be unwelcome. That’s it then.
S*d ‘em I’m out of FC.
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Mar 17, 2014 22:55:57 GMT
I read with some concern the new T&C's: So lenders could suffer additional costs of up to 2%, as well as only receiving funds quarterly. While the failing of a platform would be disastrous for the industry, lenders also having to fund this through an additional fee would be unwelcome. Has this got something to do with the new requirements required by FCA either now or sometime in the future? I am aware that there were many different concerns raised during the consultation phase on the subject of Crowdfunding businesses going bust/insolvent or otherwise ceasing trading.
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blender
Member of DD Central
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Post by blender on Mar 17, 2014 23:10:07 GMT
What is the problem? For some reason FC has to stop trading and you expect to be able to sell your loan parts? To whom exactly? And using which platform? Being left with the loan contracts intact is surely an acceptable outcome in those circumstances; your money and contractual rights are still there. No reason, I would think, that there could not be some factoring operation outside of the system whereby your interest in the loans could be sold, at rather more than 3% discount. The regulator could be of some help here in the event of a failure, but it would depend on the circumstances.
The probability of FC failing has not been increased by making sensible contingent arrangements.
(p.s. I also think that 2% as a ceiling is pretty good when you consider that there would be no income from borrowers for the company taking it on - would you contract to do it for 1%?)
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Post by bracknellboy on Mar 18, 2014 6:55:37 GMT
FC always had some form of backup arrangement written into their Ts and Cs. It was one of my 'minimum requirements' before investing with any p2x. I don't recall however there being any statement on fee levels before, but I have always worked on the assumption that in the event of a platform going belly up (with fallback arranagments in place) I should bank on two things:
1. any fees charged are liable to be increased.
2. I must assume that the fall back provider will not operate a secondary market.
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Post by jackpease on Mar 18, 2014 7:34:36 GMT
I'm mildly reassured that FC is talking about what happens in a crash - I think if there is a failure of any established P2P platform then it'll be infectious - if one fails, all will fail by virtue of nobody being prepared to buy loan parts off any platform. So IMHO FC is probably being realistic.
I am more concerned about it all going to a third party, I'm no lawyer but that would make it very hard to take any legal action if the platform failed due to mismanagement/fraud etc.
Jack
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pikestaff
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Post by pikestaff on Mar 18, 2014 17:21:29 GMT
I think this is just FC being open and honest about the backup arrangements in place. All platforms will need to have these when they are fully regulated, and there are sure to be costs involved. With the bigger platforms, I would not lose any sleep over this at all. If they get into difficulty, the more likely outcome is someone will acquire the business and keep it going.
PS: As I read it, FC are saying the total fee would not exceed 2% pa. Currently FC's fee is 1% pa, so the max additional cost is 1% pa.
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Post by davee39 on Mar 18, 2014 17:22:05 GMT
This is actually Good News. Platform failure could lead to a total loss in an unregulated world. This FCA requirement ensures all loans are repaid in an orderly manner, while removing the costs involved in maintaining the website infrastructure. The extra fee covers the fact that the borrower income would dry up.
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wysiati
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Post by wysiati on Mar 18, 2014 21:04:01 GMT
The FC back up arrangements are not 'new news' and have not been instigated by FC as a result of pending regulation. FC, as a founding member, had a strong input into the Operating principles of the P2PFA with back up arrangements to allow orderly administration of outstanding loan contracts in the event of a platform failure being a key element of these. The P2PFA member platforms will themselves have been making the case for the inclusion of such as part of any regulatory regime.
As bracknellboy notes FC has had the arrangements in place for some time but the potentially higher fee structures (up to 2% total) were also included in the FC T&Cs as of August 2010.
This thread appears to have arisen because someone has spotted that a question was asked on the official FC forum and that in response the current T&Cs were posted. What the various comments on both forums also suggest is that a heck of a lot of people have signed up without properly reading the small print.
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mikeb
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Post by mikeb on Mar 19, 2014 14:57:00 GMT
As bracknellboy notes FC has had the arrangements in place for some time but the potentially higher fee structures (up to 2% total) were also included in the FC T&Cs as of August 2010. Yes, but FC must have started, like, at least a few days before that, so it's a comparatively new term, right? No?  Of course it was there from VERY early on, it even predates the P2P association doesn't it? It was just something that seemed a good idea and they did it. The "reserving the right to charge more" is also sensible, we hope it never comes to that, but ... Looking at the OP: I'm surprised that easteregg, keeper of the p2p site, didn't know this was on the books from way back -- I'd have expected that sort of misunderstanding from a new customer! Ah well ...
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Post by GSV3MIaC on Mar 19, 2014 19:03:36 GMT
It probably seemed like a good idea since at least one platform has (and had before then?) gone Mammaries Skyward with no way for the lenders to collect their dosh from the (lucky!) borrowers.
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Post by transo on Mar 19, 2014 22:08:08 GMT
FC has had this arrangement from the start (well, a week in when I first looked), although I don't remember noticing the provision that the fees might increase. However at that point I was only putting in £500 to see what happened under the theory the whole lot might disappear. The rules the FCA implemented (in PS14/4, for the geeks following along in the front row) require all FCA regulated P2P lenders to have such arrangements, and the guidance is clear that the arrangements need to allow for the fact that the income from the loan pool will decrease as it is run off. Under the rules FC will have to inform us of any changes to these arrangements, and of the identity of any third party they've made the arrangements with.
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