lexo
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Post by lexo on Jun 1, 2016 19:27:32 GMT
Recently I checked one of FS loans issued against several domains. In the description of the loan FS says that the registration of the domains has been transferred to FS. I checked whois of those 3 domains and couldn’t find any traces of FS. FS didn’t seem to care to clarify that. That makes me wonder if FS really does what it says: does FS holds the security on other loans or the security is held by somebody else and as from the legal stand point we lend to FS and not the borrowers and if the platform goes bust intentionally or unintentionally will the investors actually have any rights to the security of the loans. We can’t check what they store in their vaults, but I’m wondering if anyone has checked the land register to see if FS has any charges on properties they claim they have charges. |
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Post by earthbound on Jun 1, 2016 20:01:01 GMT
Recently I checked one of FS loans issued against several domains. In the description of the loan FS says that the registration of the domains has been transferred to FS. I checked whois of those 3 domains and couldn’t find any traces of FS. FS didn’t seem to care to clarify that. That makes me wonder if FS really does what it says: does FS holds the security on other loans or the security is held by somebody else and as from the legal stand point we lend to FS and not the borrowers and if the platform goes bust intentionally or unintentionally will the investors actually have any rights to the security of the loans. We can’t check what they store in their vaults, but I’m wondering if anyone has checked the land register to see if FS has any charges on properties they claim they have charges. i would presume that the asset will be treated the same as any other asset and a legal charge placed on the asset, FS does not have to assume ownership of the web domains, It will just be in a position to force the sale of the asset if the borrower defaults. Cant see it being any different than a car/boat/house. not a lot to worry about.  As for the security of the platform, under FCA rules FS has to have in place a secondary entity that will run down the loanbook on behalf of the lenders if the inevitable happened.( edit.. highly unlikely at the moment, they are a long standing P2P/pawn company, but..may not be the situation 12 months down the line, nobody knows...) As for charges over properties, you can visit the land registry yourself and check that FS do/do not have a charge over any property you lend on, it costs £3.
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mikes1531
Member of DD Central
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Post by mikes1531 on Jun 1, 2016 21:30:04 GMT
lexo i would presume that the asset will be treated the same as any other asset and a legal charge placed on the asset, FS does not have to assume ownership of the web domains, It will just be in a position to force the sale of the asset if the borrower defaults. Cant see it being any different than a car/boat/house. not a lot to worry about. The other thing FS need to be able to do is prevent the owner from selling the security. Charges registered with the Land Registry would do that. Physically holding a car/boat/jewellery would do that. I think the issue with domains is whether FS could stop the sale of the domain. If they can, then there's no problem. If they can't...
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Post by earthbound on Jun 1, 2016 21:58:54 GMT
lexo i would presume that the asset will be treated the same as any other asset and a legal charge placed on the asset, FS does not have to assume ownership of the web domains, It will just be in a position to force the sale of the asset if the borrower defaults. Cant see it being any different than a car/boat/house. not a lot to worry about. The other thing FS need to be able to do is prevent the owner from selling the security. Charges registered with the Land Registry would do that. Physically holding a car/boat/jewellery would do that. I think the issue with domains is whether FS could stop the sale of the domain. If they can, then there's no problem. If they can't... wouldn't a simple legal charge over the asset as i suggested in my OP solve that? If FS have a legal charge over the asset the surely the owners cannot sell it without the consent from FS.
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mikes1531
Member of DD Central
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Post by mikes1531 on Jun 2, 2016 3:00:45 GMT
The other thing FS need to be able to do is prevent the owner from selling the security. Charges registered with the Land Registry would do that. Physically holding a car/boat/jewellery would do that. I think the issue with domains is whether FS could stop the sale of the domain. If they can, then there's no problem. If they can't... wouldn't a simple legal charge over the asset as i suggested in my OP solve that? If FS have a legal charge over the asset the surely the owners cannot sell it without the consent from FS. : I think it all depends on how systems are organised. With property, charges are logged via the Land Registry and the Land Registry won't accept a change of ownership without the approval of any charge holders. I don't know whether the registration of domains is as tightly controlled. If not, then there might not be anything that actually would prevent FS's borrower from selling the domain to someone else and transferring the registration. If FS have a signed piece of paper saying they have a charge on the names, but it doesn't actually stop an ownership change, then they may have an airtight case against the borrower if they did pull a trick like that, but they'd have to go to court after the fact to sue the borrower and who knows how much that might cost and how long it might take to resolve. And while they might get a judgement against the borrower would they be able to collect on it? Those are the sort of questions that would become important unless systems are in place to stop an ownership change from happening in the first place. Jewellery stored in a vault to which only FS have the key is obviously much less of a problem. 
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Post by fundingsecure on Jun 2, 2016 7:43:45 GMT
Just to reassure anyone reading this thread:
Assets
Physical assets such as jewellery, cars, artwork are all stored in secured facilities. In the case of jewellery we have our own offsite vault. In the case of cars and artwork we use third party professional storage facilities with appropriate security.
Property
We take legal charges on property, which are verifiable on the land registry. If the borrower is a company we would additionally take a PG and (if appropriate) place a charge on the company. Individual loan details will give more information relating to other types of security.
Domains
Domains are not "owned" by anyone. We take full control of domains by transferring registration to FundingSecure. Depending upon the request of the borrower this may be directly visible or protected by a privacy system. No funds are paid out until the transfer of the domain registration to FundingSecure has completed. The borrower can continue to use the domain (mail, web etc) but cannot sell / transfer control to anyone else. In the event of a default FS would have the right to "sell" the domain by transferring the registration.
Other Items
In other cases we may take security by other means, such as a bill of sale or registration of a charge on ships register, etc. Again individual loans will give more specific details.
Peer-to-peer
FundingSecure was one of the first true peer-to-peer platforms. All of the contracts with borrowers identify FundingSecure as the "agent and trustee" on behalf of the investors. All investor funds are ring-fenced, separately from FS accounts. In the event that FS platform failed the contracts would still be valid between the investors and the borrowers - they would not form part of FS assets. As required by the FCA we have an arrangement in place to ensure that, in the event of failure of the platform, any outstanding loans would continue to be serviced until completion.
Anyone requiring more detailed information should contact us directly - as more specific details would not be appropriate on a public forum.
FundingSecure
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max
Posts: 75
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Post by max on Jun 2, 2016 11:50:44 GMT
Just to reassure anyone reading this thread: Property We take legal charges on property, which are verifiable on the land registry. If the borrower is a company we would additionally take a PG and (if appropriate) place a charge on the company. Individual loan details will give more information relating to other types of security. I didn't know FS takes PG/debentures from borrowers in property loans. I cannot find reference to this info in the description of any property loans nor in the FS website. I would increase my level of investment in property loans if this info was confirmed in the loans description. Perhaps fundingsecure could devote more time/resources to communicate with its lenders. This could result in attracting larger investments at very low additional cost.
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Post by fundingsecure on Jun 2, 2016 20:55:56 GMT
Max,
as indicated - in the case where the borrower is a company we take (where appropriate) a debenture and / or PG - this is already listed in the loan details.
FundingSecure
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max
Posts: 75
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Post by max on Jun 4, 2016 14:37:03 GMT
Max, as indicated - in the case where the borrower is a company we take (where appropriate) a debenture and / or PG - this is already listed in the loan details. FundingSecure Sorry, but I cannot find reference to a debenture or PG being taken in the loan description of any of the property loans currently listed. It seems that PGs and debentures are the exception rather than the norm for property loans. IMO they would provide additional comfort to lenders expecially in property loans with uncertain evaluations, e.g. land with planning permissions.
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Post by earthbound on Jun 4, 2016 15:24:19 GMT
fundingsecure . thanks for the info, communicating with lenders. I like it, keep it up.
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