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Post by dualinvestor on Jul 25, 2016 16:13:51 GMT
You would have to seek clarification from Lendy Ltd and/or LPRL for a definitive answer.Yes I realise that, but I thought that if I phrased the question as do you have  structure I would be more likely to get a useful reply. Asking something like "Is it OK?" would produce a predictable response. Sorry, but at the moment we do not even know, from public information, basic details such as whether LPRL has a bank account. I do seem to recall that someone said that SS posted a copy of a bank statement purporting to show the balance of the PF but as I did not see that myself I don't know in what name the bank account was. Edit Under normal circumstances funds can only be protected from normal creditors if they are in a designated clients account. The arrangements of a provision fund (on any platform) do not seem to meet those requirements; however I think it highly unlikely that legal advice was not sought when setting it up, in the event of platform failure it would probably be up to a court to decide whether such arrangements are effective.
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mikes1531
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Post by mikes1531 on Jul 27, 2016 2:00:42 GMT
Sorry, but at the moment we do not even know, from public information, basic details such as whether LPRL has a bank account. I do seem to recall that someone said that SS posted a copy of a bank statement purporting to show the balance of the PF but as I did not see that myself I don't know in what name the bank account was. Edit Under normal circumstances funds can only be protected from normal creditors if they are in a designated clients account. The arrangements of a provision fund (on any platform) do not seem to meet those requirements; however I think it highly unlikely that legal advice was not sought when setting it up, in the event of platform failure it would probably be up to a court to decide whether such arrangements are effective. It was me that said SS posted a copy of a bank statement purporting to show the balance of the PF. I tried to search for it, but couldn't find it. What I did find that was relevant to this thread was... Hi Everyone. Just a summary: 2014 Net Profit over £420k Loans out at end of 2014 - £15m 2015 so far Loans out £35m Profit ratios better than last year. Aiming for £60m end of 2015 and new lending end 2016. There is over £700k in the provision fund right now plus plenty of working capital in our ops accounts. We are very happy.
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Jul 27, 2016 7:45:12 GMT
The quoted amount in the PF is always exactly 2% of the loan book. Either they have automated the inter account transfer process or the quoted amount is simply a calculated figure. I am not a lawyer either but it seems likely to me that they cannot legally hold the funds in a client account and still maintain that payout is discretionary, and that wherever the funds are Lendy's creditors will have priority over us (for loans under the new T&Cs).
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Post by dualinvestor on Jul 27, 2016 8:02:03 GMT
The quoted amount in the PF is always exactly 2% of the loan book. Either they have automated the inter account transfer process or the quoted amount is simply a calculated figure. I am not a lawyer either but it seems likely to me that they cannot legally hold the funds in a client account and still maintain that payout is discretionary, and that wherever the funds are Lendy's creditors will have priority over us (for loans under the new T&Cs). The PF is clearly not a designated clients account. Lendy Ltd have published very little detail on what the PF actually is, Zopa on the other hand are quite explicit www.zopa.com/lending/risk-data#safeguard, as are Ratesetter. With SS it is not contractual the details for its constitution, source of funds and location are vague or non-existant. It is not mentioned in the terms and conditions of the platform. SS/Lendy Ltd does operate a clients account but that is for funds deposited with the platform before they are lent to a borrower and should be the first destination for any loan repayments due to investors, prior to themm being withdrawn or reinvested.. Such account will be operated to strict rules and at no time should monies in that account be mixed with funds belonging to the company.
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webwiz
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Post by webwiz on Jul 27, 2016 9:41:47 GMT
On the home page where it describes the PF it shows a stress test against the "largest loan" but in fact there are 10 live loans larger than this one, up to over twice as large.
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Post by dualinvestor on Jul 27, 2016 10:12:43 GMT
On the home page where it describes the PF it shows a stress test against the "largest loan" but in fact there are 10 live loans larger than this one, up to over twice as large. Whether one agrees with the calculations or not the "retail" platforms have a system calculated on a methodology with enough records of their own to have a statisically significant sample for their provision funds. It is pretty clear with SS that the figure is an arbitary one, whcich even now they probably don't have a statistically significant sample of completed loans to justify or otherwise and certainly didn't when they started business. With a relatively small number of loans that have completed and some being larger than the entire provision fund it is clear that it is only of symbolic value. Either Lendy Ltd will make up the shortfall on any default from their "vast profits" (per the thread where they claimed to be the most profitable P2P platform in the universe) or they will forgo the marketing advantage of "not a penny lost."
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mikes1531
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Post by mikes1531 on Jul 27, 2016 13:33:18 GMT
On the home page where it describes the PF it shows a stress test against the "largest loan" but in fact there are 10 live loans larger than this one, up to over twice as large. This info was accurate once, but that was some time ago -- a year?? -- and it never has been updated. This has been pointed out to savingstream numerous times, but they obviously can't be bothered to update it. Why they persist in showing out-of-date figures is beyond me. IMHO, the regulators would not be happy with this if they were aware of it.
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mikes1531
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Post by mikes1531 on Jul 27, 2016 13:43:38 GMT
The quoted amount in the PF is always exactly 2% of the loan book. Either they have automated the inter account transfer process or the quoted amount is simply a calculated figure. I am not a lawyer either but it seems likely to me that they cannot legally hold the funds in a client account and still maintain that payout is discretionary, and that wherever the funds are Lendy's creditors will have priority over us (for loans under the new T&Cs). I expect the number quoted on the website is calculated from the loan book total and does change automatically whenever the portfolio changes. The account itself might not be automated, but it shouldn't require a lot of attention from SS. All they have to do is make a deposit, or withdrawal, whenever a new loan is added to the portfolio, or repaid. I'm not a lawyer either, but I don't see why the fund can't be in a client account or trust account just because it's discretionary. Because of the discretionary aspect, it's impossible to say which specific loans or investors it's for the benefit of, but it's for the benefit of all investors as a group, and thus ought to be ring-fenced and kept out of the reach of SS creditors. If it can't be kept separate then it'd be of little or no use in the event of a platform failure.
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Post by dualinvestor on Jul 27, 2016 15:27:47 GMT
The quoted amount in the PF is always exactly 2% of the loan book. Either they have automated the inter account transfer process or the quoted amount is simply a calculated figure. I am not a lawyer either but it seems likely to me that they cannot legally hold the funds in a client account and still maintain that payout is discretionary, and that wherever the funds are Lendy's creditors will have priority over us (for loans under the new T&Cs). I expect the number quoted on the website is calculated from the loan book total and does change automatically whenever the portfolio changes. The account itself might not be automated, but it shouldn't require a lot of attention from SS. All they have to do is make a deposit, or withdrawal, whenever a new loan is added to the portfolio, or repaid. I'm not a lawyer either, but I don't see why the fund can't be in a client account or trust account just because it's discretionary. Because of the discretionary aspect, it's impossible to say which specific loans or investors it's for the benefit of, but it's for the benefit of all investors as a group, and thus ought to be ring-fenced and kept out of the reach of SS creditors. If it can't be kept separate then it'd be of little or no use in the event of a platform failure. I do not think the primary reason for the PF is for the event of platform failure. It is IMO, for reasons stated above, more a marketing tool than anything else. If it is separate from the assets of Lendy Ltd it would be up to the controllers of the fund what they did with it, as they are the same people as the directors of SS they would have to take advice as to whether payments to the platform lenders represented a preference within the meaning of the Insolvency Act. However I would expect that it might be a moot point as in the event of a failure of the platform it is likely that recoveries from the loans will become considerably more difficult. Referring to the status, although the fund could well be a trust it is most definitely not a client's account. It has none of the characteristics required to be one.
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littleoldlady
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Post by littleoldlady on Jul 27, 2016 17:01:37 GMT
The quoted amount in the PF is always exactly 2% of the loan book. Either they have automated the inter account transfer process or the quoted amount is simply a calculated figure. I am not a lawyer either but it seems likely to me that they cannot legally hold the funds in a client account and still maintain that payout is discretionary, and that wherever the funds are Lendy's creditors will have priority over us (for loans under the new T&Cs). I expect the number quoted on the website is calculated from the loan book total and does change automatically whenever the portfolio changes. The account itself might not be automated, but it shouldn't require a lot of attention from SS. All they have to do is make a deposit, or withdrawal, whenever a new loan is added to the portfolio, or repaid. I'm not a lawyer either, but I don't see why the fund can't be in a client account or trust account just because it's discretionary. Because of the discretionary aspect, it's impossible to say which specific loans or investors it's for the benefit of, but it's for the benefit of all investors as a group, and thus ought to be ring-fenced and kept out of the reach of SS creditors. If it can't be kept separate then it'd be of little or no use in the event of a platform failure. AIUI if it was in a client account it would legally belong to the clients. If in a trust to the trust beneficiaries. In either case Lendy directors would be merely custodians. I don't think it is their intention that the funds in the PF will be handed to lenders come what may. I imagine it will be their pension fund if not used to compensate for defaults. I agree with your final sentence. The PF is to cater for the odd individual default not platform failure. The most likely end game for the PF IMO will be when SS is sold off to a larger p2p operator, or to a large financial company wanting to get into p2p, with the PF being excluded from the sale. This is the most common outcome of successful start-ups.
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Post by dualinvestor on Jul 29, 2016 11:38:15 GMT
On the home page where it describes the PF it shows a stress test against the "largest loan" but in fact there are 10 live loans larger than this one, up to over twice as large. This info was accurate once, but that was some time ago -- a year?? -- and it never has been updated. This has been pointed out to savingstream numerous times, but they obviously can't be bothered to update it. Why they persist in showing out-of-date figures is beyond me. IMHO, the regulators would not be happy with this if they were aware of it.@mike1531 I don't think the regulators are too concerned about these aspects of this or any other provision fund; however according to the later posts on this thread FCA bans skin in the game it would seem the whole concept is a matter of concern as far as the FCA is concerned. Not all platforms have one and Zopa, at least, seem to be resiling from theirs.
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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 Jul 29, 2016 19:39:40 GMT
savingstream as youre online fancy commenting on the provision fund which has attracted some debate Is it an fully independent company or a Lendy subsiduary? Is it at risk if SS/Lendy get into trouble? Are the funds kept in a trust/client account? Will it reply just capital or interest as well?
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Aug 1, 2016 14:54:52 GMT
savingstream as youre online fancy commenting on the provision fund which has attracted some debate Is it an fully independent company or a Lendy subsiduary? Is it at risk if SS/Lendy get into trouble? Are the funds kept in a trust/client account? Will it reply just capital or interest as well? Since SS are taking a bit of a sabbatical from this forum, I sent the questions direct to them, and this is their response... 1. Is Lendy Provision Reserve Ltd a fully independent company or a Lendy Ltd subsidiary?The Directors of Lendy Ltd and Saving Stream are also the directors of the Provision fund. They have the same shareholders but, are different independent companies.
2. Is it at risk if Lendy Ltd gets into trouble?The Provision Fund exists in order to compensate investors in the event that the sale of the security does not result in full repayment of the loan. 3. Are the funds kept in a trust account?The funds are kept with Lendy Provision Reserve Ltd which has the same shareholders and directors as Lendy Ltd and is not a trust account. 4. Will the provision fund reply just capital or interest as well?Investors capital is at risk and interest payments are not guaranteed if a borrower defaults.
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Aug 1, 2016 15:21:08 GMT
Classic non-answer answers, there. No.4 was the best one.... they seemed to have answered a question I didn't ask 
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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 Aug 1, 2016 15:22:20 GMT
Classic non-answer answers, there. Indeed. Oh well we tried. Probably could have phrased them better but doing it quick to catch them online & responsive
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structure I would be more likely to get a useful reply. Asking something like "Is it OK?" would produce a predictable response.
