fp
Posts: 1,008 
Likes: 853
|
Post by fp on Aug 1, 2016 15:24:16 GMT
Basically the provision fund is theirs and they will do as they see fit with it..... don't hold your breath in the event of it being needed.
|
|
|
|
Post by meledor on Aug 1, 2016 15:58:38 GMT
I'm not sure why some are making heavy weather of understanding the provision fund. I also think there are one or two here adding to the uncertainty.
The principles behind the provision funds operated by P2P platforms were explained over 12 months ago:
www.altfi.com/article/0899_faq_corner_what_is_a_provision_contingency_safeguard_fund
Though the numbers quoted are now out of date the way the fund is described to operate (at least as far as SS is concerned) is not. The answers provided by SS are consistent with this.
|
|
littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,045
Likes: 1,862
|
Post by littleoldlady on Aug 1, 2016 16:04:33 GMT
I'm not sure why some are making heavy weather of understanding the provision fund. I also think there are one or two here adding to the uncertainty.
The principles behind the provision funds operated by P2P platforms were explained over 12 months ago:
www.altfi.com/article/0899_faq_corner_what_is_a_provision_contingency_safeguard_fund
Though the numbers quoted are now out of date the way the fund is described to operate (at least as far as SS is concerned) has not. The answers provided by SS are consistent with this. Not answered are the questions: Is the PF held in a separate bank account? Does or can the PF company make loans to Lendy or SS for use as working capital? BTW I personally don't mind what the answers are, but I suspect that a lot of lenders have a rosy image of the PF.
|
|
|
|
Post by meledor on Aug 1, 2016 17:08:06 GMT
Not answered are the questions: Is the PF held in a separate bank account? Does or can the PF company make loans to Lendy or SS for use as working capital? BTW I personally don't mind what the answers are, but I suspect that a lot of lenders have a rosy image of the PF.
SS stated when the PF was set up that " Recently Lendy Ltd has been discussing how best to improve investor security and is considering offering a Provision Fund of their own. It would be a discretionary fund setup as a separate company that held 2% of the value of Lendy Ltd's current live book as a cash balance in the fund at all times. The fund would be to cover any potential shortfall when dealing with property disposals, thus improving investor security."
p2pindependentforum.com/thread/1952/why-invest
Now if Lendy Provision Reserve Ltd did not have a separate bank account but shared it with another Lendy company then 2% of Lendy Ltd's current loan book would not be held "as a cash balance in the fund at all times." It would be an inter company receivable rather than cash at bank - the same applies to your second question.
I am personally not a great fan of provision funds but I do wonder sometimes why they generate so much discussion/uncertainty.
|
|
|
|
Post by dualinvestor on Aug 1, 2016 18:18:40 GMT
Not answered are the questions: Is the PF held in a separate bank account? Does or can the PF company make loans to Lendy or SS for use as working capital? BTW I personally don't mind what the answers are, but I suspect that a lot of lenders have a rosy image of the PF.
SS stated when the PF was set up that " Recently Lendy Ltd has been discussing how best to improve investor security and is considering offering a Provision Fund of their own. It would be a discretionary fund setup as a separate company that held 2% of the value of Lendy Ltd's current live book as a cash balance in the fund at all times. The fund would be to cover any potential shortfall when dealing with property disposals, thus improving investor security."
p2pindependentforum.com/thread/1952/why-invest
Now if Lendy Provision Reserve Ltd did not have a separate bank account but shared it with another Lendy company then 2% of Lendy Ltd's current loan book would not be held "as a cash balance in the fund at all times." It would be an inter company receivable rather than cash at bank - the same applies to your second question.
I am personally not a great fan of provision funds but I do wonder sometimes why they generate so much discussion/uncertainty.
Hmmm, could it be that some platforms make a big issue of them and then provide little detail on their legal set-up or operation? E.g on the front page of the SS webb site under "We're safe and secure" "we maintain a large Provision Fund so we can return your investment if the borrower defaults."
|
|
littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,045
Likes: 1,862
|
Post by littleoldlady on Aug 1, 2016 21:26:37 GMT
Not answered are the questions: Is the PF held in a separate bank account? Does or can the PF company make loans to Lendy or SS for use as working capital? BTW I personally don't mind what the answers are, but I suspect that a lot of lenders have a rosy image of the PF.
SS stated when the PF was set up that " Recently Lendy Ltd has been discussing how best to improve investor security and is considering offering a Provision Fund of their own. It would be a discretionary fund setup as a separate company that held 2% of the value of Lendy Ltd's current live book as a cash balance in the fund at all times. The fund would be to cover any potential shortfall when dealing with property disposals, thus improving investor security."
p2pindependentforum.com/thread/1952/why-invest
Now if Lendy Provision Reserve Ltd did not have a separate bank account but shared it with another Lendy company then 2% of Lendy Ltd's current loan book would not be held "as a cash balance in the fund at all times." It would be an inter company receivable rather than cash at bank - the same applies to your second question.
I am personally not a great fan of provision funds but I do wonder sometimes why they generate so much discussion/uncertainty.
This was just a report of a discussion about an intention, note the word "would", many moons ago and there have been multiple changes since then. I am sure that LPRL has a separate bank account, I am not so sure that it holds the full PF. What would be the point of leaving a couple of million lying idle when it could be earning 18%? I don't think this post can be taken as a statement about the current position. I agree with your last point except that if other investors are putting too much reliance IMO on the PF then perhaps they should be warned.
|
|
ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 11,329
Likes: 11,549
|
Post by ilmoro on Aug 1, 2016 22:00:45 GMT
SS stated when the PF was set up that " Recently Lendy Ltd has been discussing how best to improve investor security and is considering offering a Provision Fund of their own. It would be a discretionary fund setup as a separate company that held 2% of the value of Lendy Ltd's current live book as a cash balance in the fund at all times. The fund would be to cover any potential shortfall when dealing with property disposals, thus improving investor security."
p2pindependentforum.com/thread/1952/why-invest
Now if Lendy Provision Reserve Ltd did not have a separate bank account but shared it with another Lendy company then 2% of Lendy Ltd's current loan book would not be held "as a cash balance in the fund at all times." It would be an inter company receivable rather than cash at bank - the same applies to your second question.
I am personally not a great fan of provision funds but I do wonder sometimes why they generate so much discussion/uncertainty.
This was just a report of a discussion about an intention, note the word "would", many moons ago and there have been multiple changes since then. I am sure that LPRL has a separate bank account, I am not so sure that it holds the full PF. What would be the point of leaving a couple of million lying idle when it could be earning 18%? I don't think this post can be taken as a statement about the current position. I agree with your last point except that if other investors are putting too much reliance IMO on the PF then perhaps they should be warned. Whats the point of any PF for any platform being left in a bank account? RS obviously didnt think it logical as werent they using/consideringising it to invest in loans? SS structure seems to be exactly the same as RS - separate company with two common directors - funded by fees from borrowers as is Lendy's the exception being that RS isnt linked to loan book size. Not sure what your point is regarding 'would', they did. same as they were 'considering' a trust structure which they also implemented. There have been a number of subsequent posts on the subject. Interesting to note that when they first mentioned a PF it was to be funded from interest foregone on the SM, instead they have used their own fee income (plus some SM interest maybe) I agree more clarity would be useful but I think we need to just assume that they have done what they said they would do - same as any other platform.
|
|
littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,045
Likes: 1,862
|
Post by littleoldlady on Aug 2, 2016 7:24:18 GMT
We are all speculating. SS could put this discussion to bed, but they have not, which encourages speculation.
|
|
|
|
Post by meledor on Aug 2, 2016 8:31:25 GMT
We are all speculating. SS could put this discussion to bed, but they have not, which encourages speculation.
Some are speculating, I agree, which was my point yesterday that some are adding to the uncertainty, which is unhelpful. By that I mean the idea that because we cannot prove anything then we must go on discussing the idea that the provision fund might not be in a separate company or somehow subject to possible claims by creditors, that the fund could be part of Lendy's working capital and that it is rather naughty of SS to take out the 2% for loans that have repaid. SS made it clear from the beginning how the provision fund would work and have been consistent in their approach. Of course I am not so naive as to believe everything without giving it some thought and if anyone has doubts surely they would email SS? But to keep on discussing the possibility that SS are not operating the provision fund in the way that they said they would is not very helpful. If one cannot trust SS in this would one trust anything SS says?
|
|
|
|
Post by dualinvestor on Aug 2, 2016 8:55:27 GMT
We are all speculating. SS could put this discussion to bed, but they have not, which encourages speculation.
Some are speculating, I agree, which was my point yesterday that some are adding to the uncertainty, which is unhelpful. By that I mean the idea that because we cannot prove anything then we must go on discussing the idea that the provision fund might not be in a separate company or somehow subject to possible claims by creditors, that the fund could be part of Lendy's working capital and that it is rather naughty of SS to take out the 2% for loans that have repaid. SS made it clear from the beginning how the provision fund would work and have been consistent in their approach. Of course I am not so naive as to believe everything without giving it some thought and if anyone has doubts surely they would email SS? But to keep on discussing the possibility that SS are not operating the provision fund in the way that they said they would is not very helpful. If one cannot trust SS in this would one trust anything SS says?
wasn't that something that what cooling_dude did yesterday and got "non-answers"? For what its worth I believe this is a side show, the Provision Fund, however it is set up and where its assets are, is little more than a marketing tool for SS. It is obviously based on an arbitary amount, the funds are supplied effectively as a deferred arrangement fee by the borrowers. The size and distribution of the loans mean that if SS want to keep their "not a penny lost" reputation in the long term it is likely that it will not be because of the provision fund but as a decision of the directors of Lendy Ltd ( not LPRL, although they are the same people) and any large shortfall will have to be paid by that company.
|
|
