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Post by dualinvestor on May 13, 2016 8:18:58 GMT
As most people on here already know some investment opportunties are only available to people who can demonstrate that they know the risks of the transactions they are entering into and/or are HNWI (High Net Worth Individuals), particularly options trading, CFDs etc.
In descending order of risk the P2P market goes from some quite esoteric areas, such as aircraft finance, through secured quasi pawnbroking to retail lending with commensurate levels of return depending on risk. In the two examples cited above there is good reason for the restriction as losses can exceed original investment; however there does appear to be a marked optimism amongst some on this board, who can be presumed to be the more experienced P2P investors, that there is little risk in P2P.
Rather than the FCA solely judging whether the company has the proper procedures in place should it also make sure that the people who do invest, especially in the high return platforms, are capable of understanding risks and can afford to lose their capital invested?
My personal view is that the platforms do not do enough to highlihght the risk but we probably don't need another level of bureacracy to protect the investors from their own cavalier attitude; however if and when there should be widespread losses in P2P plenty of questions will be posed as to why there was not more "protection"
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Post by davee39 on May 13, 2016 8:39:16 GMT
The current risk warnings on platforms may well discourage investment in the relatively safe top 3 platforms among the risk averse, while failing to deter investment in the very high rate, high risk, offerings.
FCA authorisation regulations are not yet sufficiently robust to protect fools determined to be parted from their money.
I would like to see providers independently risk rated for both loan risk and platform risk. Providers rated higher risk should not be able to hide behind pages of small print terms and conditions but should force investors to agree to a very clear risk statement.
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Post by closetotheedge on May 13, 2016 8:44:41 GMT
I currently use RS, Zopa and Wellesley and I do not think they could have done more to inform me of the risks involved. I have a bare minimum of investing experience and if I lose my money I cannot say I was not warned. As for high net worth individuals knowing more than your man on the street I do not think money has any impact on intelligence or understanding. As I have aged my wealth has grown but I have certainly not become smarter or more cautious as a result.
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Post by earthbound on May 13, 2016 9:07:21 GMT
dualinvestor a very good question that I feel relates directly to me, due to my recent posts , and replies, it's interesting to me that I may/may not be perceived to be some kind of foolish or unintelligent investor who needs the FCA to 'watch my back' because I do not conform to some/all of the negativity that prevails around p2p.. I have stated my position on more than one occasion, and it regularly brings a smile to my face when I venture onto the Rebs AC threads and others, and read the Whining post's of certain people losing there hard earned and then have the audacity to tag/quote me telling me how I'm heading for oblivion  I can walk into any casino in the Uk if I like and put it all on red.....  Or  There no signs on the roulette tables asking me if I really understand that I could lose my money... But it is my choice, and the last thing I think the P2P industry needs is anything additional to what we have in place now .More warning ? Personally yes , how much more? Who knows. Pity more prominent warnings weren't in place when we were all putting our money in nice safe Icelandic banks before they went kaput. I purposely have not tagged or quoted you because it's not aimed at you or anyone else, but it is interesting to see some quotes being made already regarding people to be fools. 
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adrianc
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Post by adrianc on May 13, 2016 9:50:27 GMT
There's been at least one THC project where the investor's been required to fill in a self-certification of "HNWI/experienced investor" status. HCP117, an off-plan £60k-down, £345k-completion, sell-the-place-in-the-queue development.
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archie
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Post by archie on May 13, 2016 9:55:01 GMT
Everyone should have sufficient capital in safer investments to cover P2P disasters, I doubt that's the case though. New pension freedoms are another area where there is plenty of scope for people to run out of money. It's a tricky situation but I'm not sure there is an ideal solution. Higher minimum lending per investment would go some way to regulate it but there are several platforms with smaller loans that couldn't operate that way. I guess more warnings when you sign up and further checks by the P2P sites on your identity is probably the way forward. I'm sure people who visit this site know what they're doing though  |
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jimbob
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Post by jimbob on May 13, 2016 11:02:46 GMT
Although not quite a year into P2P and certainly not being a HNWI, I'm comfortable with some expected losses knowing that sensible and diversified investment should be able to yield a decent interest rate in the round. I also bet on events long term profitably (politics mainly) so am comfortable with uncertain return investments.
I do note that I've had emails from certain companies (Not on this site) offering what look like bridging loans at the same apparent risk profile as some on this site paying around 12% yet paying an "amazing" 7%...
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pom
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Post by pom on May 13, 2016 11:21:45 GMT
There's been at least one THC project where the investor's been required to fill in a self-certification of "HNWI/experienced investor" status. HCP117, an off-plan £60k-down, £345k-completion, sell-the-place-in-the-queue development. Hmm they are so not a good example in my mind - they rely too much on "you must read the small print" whilst sending out emails like one I received this morning offering rates that "should produce up to" a completely unachievable "9.5% in rental yield" (unachievable because when you read the small print that figure is based on the purchase price before even factoring in the acquisition costs, let alone any of the other costs) and saying how quickly the last one went. As for generally, even with all the scams constantly being covered in the media there still seem to be far too many people insistent on overfilling their baskets, which is such a shame when there are so many ways to diversify. Platforms are still far too silent on diversification for my liking though.
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Post by mrclondon on May 13, 2016 11:32:56 GMT
I would like to see regulator action to force platforms to
a) use LTVs based on current value of the asset with no hope value, no back calculating from GDV to residual value, just vanilla land value based on current planning consent.
b) provide full disclosure of borrower's financial affairs
c) provide standardised default reporting (historical and projected) not the weird P2PFA approach
Without that, restricting p2p to sophisticated investors is a necessity IMO to protect the platforms (and hence indirectly us) from the huge risk to the sector of mis-selling action due to the misrepresentation of the underlying assets by the platform.
The current approach is simply unsustainable IMO.
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Post by wiseclerk on May 13, 2016 12:12:50 GMT
Do you really want more restrictions? I am opposed to that. I want to be free with my money to do what I want, even if that carries a high risk. Some countries already impose high restrictions (e.g. most US platforms open only to accredited investors, or the self-certification rules I saw from a French platform).
The regulator should in my view concentrate on
- enforcing existing rules
- pursueing cases were false claims were made
- persecute strongly on fraud cases
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Steerpike
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Post by Steerpike on May 13, 2016 13:01:08 GMT
Yep, folk don't notice that they are being sold "insurance" and simply had no idea that coffee is hot, bring on the suits.
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Post by propman on May 13, 2016 13:17:21 GMT
I agree that some HNWI are too readily parted from their money. However the reputational risk is much lower as few would sympathise as much with a rich person making a bad investment as opposed to a "poor old dear" made destitute! I suppose at the least a HNWI is in the position of affording proper advice.
At present shares (even AIM etc.) is available to all, it is merely that marketing to non-specialists/HNWIs is more regulated. I don't think the risk on many P2Ps is any higher, so don't favour additional safeguards. That said I personally think the compensation required from many products has been excessive and that caveat emptor should be the rule. It annoys me that I cannot get limited financial advice due to regulations. I should be able to sign a disclaimer whereby the advice is based solely on my disclosure without requiring the excessive fact finding currently required.
- PM
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Post by meledor on May 13, 2016 14:14:32 GMT
I am generally against more restrictions. I think the OP is trying to create a hierarchy of P2P risk levels. But what is so esoteric about aircraft finance as compared with other finance? And how many aircraft finance companies do you know that have got into financial difficulties in the last 15 years?
I think it would be good if platforms had to ensure full details of loan were available for at least 24 hours before going live to ensure sufficient time for due diligence. But what about platforms where there is nothing to DD because hardly any information is provided or it is unsecured? If there are to be restrictions surely it is unsecured lending that should be resticted to HNWI because of the extra risk involved? At the very least you could argue that there should be more prominent warnings that you are totally relying on the platform's black box credit processes.
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Post by wiseclerk on May 13, 2016 14:43:13 GMT
It will be interesting to see how platforms react when the first ambulance chasers mis-sold pppi lawyers raise the first action against a platform for mis-selling a loan. What do you mean I was supposed to read the documents before lending my money. I can't read, be bothered, I'm stupid etc etc.Happened already. There were/are mulitple class action law suits in the US. One of the oldest examples ended 3 years ago www.p2p-banking.com/services/prosper-prosper-settles-class-action-lawsuit-pays-10m-us/
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Post by mrclondon on May 13, 2016 15:02:27 GMT
I agree that some HNWI are too readily parted from their money. However the reputational risk is much lower as few would sympathise as much with a rich person making a bad investment as opposed to a "poor old dear" made destitute! I suppose at the least a HNWI is in the position of affording proper advice.
At present shares (even AIM etc.) is available to all, it is merely that marketing to non-specialists/HNWIs is more regulated. I don't think the risk on many P2Ps is any higher, so don't favour additional safeguards.
- PM
This pdf www.lseg.com/documents/aim-rules-for-companies-pdf outlines the reporting and disclosure rules for companies listed on AIM. It is worlds away from the level of disclosure that is happening in the p2p sector. Only AC is making any effort at ongoing reporting of borrower financials through the life of the loan, and apart from TC few other platforms even bother at the outset of the loan.
The point I was trying to make is I believe there should be regulatory guidance to the platforms on the minimum level of disclosure of the underlying assets and borrower financials to enable retail lenders to make their own decisions, and that if a SM is provided that level of disclosure needs to be maintained through out the life of the loan. That we have only one platform that is even attempting this is pretty worrying.
Platforms should, IMO, have a choice of marketing to retail or sophisticated investors, with the former necessitating good disclosure of the underlying financials.
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Or 
There no signs on the roulette tables asking me if I really understand that I could lose my money... But it is my choice, and the last thing I think the P2P industry needs is anything additional to what we have in place now .More warning ? Personally yes , how much more? Who knows.
