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Post by martin44 on Aug 17, 2016 18:49:54 GMT
I would be very interested if someone could explain to me what criteria i need, for me to be classed as a "Sophisticated Investor" There is an official FCA definition which can be found somewhere on their web site, but I believe it is net assets (excluding home) of £250,000 or income greater than £100,000. Thanks, i guess i will have to continue with common sense then, and luck. 
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blender
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Post by blender on Aug 17, 2016 19:26:31 GMT
I would be very interested if someone could explain to me what criteria i need, for me to be classed as a "Sophisticated Investor" There is an official FCA definition which can be found somewhere on their web site, but I believe it is net assets (excluding home) of £250,000 or income greater than £100,000. Such as lottery winners?
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Greenwood2
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Post by Greenwood2 on Aug 17, 2016 19:44:46 GMT
Because if one goes the sophisticated investor route a) many current investors will be excluded (on income and assets qualifications) and b) P2P will never become "mass market" (which might, or might not, be desirable depending on your point of view) I see it in this way. It is my money. It is my life. I have the right to do what I want, sophisticated or not. Just not meeting the criteria of "sophisticated" does not mean that I am stupid. After all why should not an investor take responsibility for his/her own action? Why should I be restricted to a small percentage of what I own when others can mortgage all they have and invested in a company, venture capital, call it what you want? This is why in my previous post I mentioned that valuation documents need to be available to investors with no wording that excludes them. I agree, it's my money and I should be able to invest/loan it as I want, but if someone says some lenders should be protected against themselves, I don't want to be included in that. They could define sophisticated P2P lenders as lenders of more than x years, rather than the usual definition.
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ablender
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Post by ablender on Aug 17, 2016 19:52:36 GMT
I see it in this way. It is my money. It is my life. I have the right to do what I want, sophisticated or not. Just not meeting the criteria of "sophisticated" does not mean that I am stupid. After all why should not an investor take responsibility for his/her own action? Why should I be restricted to a small percentage of what I own when others can mortgage all they have and invested in a company, venture capital, call it what you want? This is why in my previous post I mentioned that valuation documents need to be available to investors with no wording that excludes them. I agree, it's my money and I should be able to invest/loan it as I want, but if someone says some lenders should be protected against themselves, I don't want to be included in that. They could define sophisticated P2P lenders as lenders of more than x years, rather than the usual definition. I can accept that if the x years is not too much.
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ablender
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Post by ablender on Aug 17, 2016 19:53:03 GMT
I see it in this way. It is my money. It is my life. I have the right to do what I want, sophisticated or not. Just not meeting the criteria of "sophisticated" does not mean that I am stupid. After all why should not an investor take responsibility for his/her own action? Why should I be restricted to a small percentage of what I own when others can mortgage all they have and invested in a company, venture capital, call it what you want? This is why in my previous post I mentioned that valuation documents need to be available to investors with no wording that excludes them. Most of that answer should be directed Greenwood2 I am not in favour of sophisticated investor status it's him/her who wanted it and my reply was telling him why I did not favour it. I am in favour of a more obvious statement that the person "investing" understands the risks and is taking responsibility but is not be lulled into a false sense of security. I accept that.
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Greenwood2
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Post by Greenwood2 on Aug 17, 2016 19:57:15 GMT
Don't seem to be able to edit, but to be clear I think everyone should be able to control their own P2P investments, just like any other financial decisions. Nanny state we don't need.
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Post by bracknellboy on Aug 17, 2016 20:51:32 GMT
I would be very interested if someone could explain to me what criteria i need, for me to be classed as a "Sophisticated Investor" There is an official FCA definition which can be found somewhere on their web site, but I believe it is net assets (excluding home) of £250,000 or income greater than £100,000. Not correct. there are 2 relevant categories/definitions. The one above relates to High Net Worth Individual. Sophisticated Investor has different eligibility criteria, and is arguably harder to cross, but easier to 'stay in' once you've got there. One of the criteria which has always made me smile is the 'Been a director of a company with > £1m turnover in the prior 2 years'. I know a number of directors that would fit that bill but would have the investment nous of a mouse; and quite why if that does make you fit to qualify you should lose the apparent fitness 2 years after no longer being a director is beyond me. www.sophisticated-investor.co.uk/self_cert.php
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shimself
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Post by shimself on Aug 17, 2016 21:17:26 GMT
verbatim from my jolly missive to fca towers
1
My understanding of p2p (or p2b) is that the firm running the website is an intermediary and takes a cut, but that the contract is between the lender and the borrower.
So, if the intermediary company went bust the lender would still get repaid if the borrower repaid.
I've come across two "p2p" companies where that doesn't seem to be the case; instead the debt is from the intermediary to the lender, so if the intermediary went bust, even if the borrower repaid in full the lender might lose some or all of their investment.
It's my contention that this is not p2p/p2b and that you should put a stop to it straightaway or at least rename it.
2
There should always be a reasonable period (48hours?) for due diligence from when a proposition is first listed on a platform until bids are accepted. Without that lenders/investors are somewhat pressured into making a bid/investment before the offering is fully invested, without having done their DD.
3
It should be made explicit as to who is getting paid by whom and when
4
If you ask me I think platforms and introducers should always co-invest; interests alignment for the purpose of aka skin in game. No good reason not to.
(I'm really encouraged by how many other people have favoured this item 4 here. It goes with the vibe p 2 p. as in we are all in this together. Yes it weakens platforms BS, but hey ho, it's part of what it takes to get in the market. As for those platforms who would go out of business because they have offered too many bad loans, that is a good thing, we want shot of them thanks very much)
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Post by propman on Aug 18, 2016 8:00:53 GMT
Personally I don't see a problem of an intermediary so long as it holds all assets for investors, is not allowed to borrow and is bankruptcy remote from the platform.
I am all in favour of allowing the unsuccessful platforms to go bust, but not to take investors money with them. This would create a media storm that would hit all P2P. You express this as a past event, great, no problem there, my issue is it happening in the future.
My thoughts on "skin in the game" is above. How much would you like to see? I would expect a VC to require 20% on capital in a P2P company as expected return. They might take less if invested in the platform, but would certainly require a return significantly above the P2P loan returns that would need to be recouped in fees leaving less for the lenders.
I think your DD point is fair, although I do wonder whether that would reduce the attractiveness as an investor as speed of funds is a big advantage of P2P. This in turn would push more platforms into making the decisions for you like Flawed Concept that would be a sad loss to P2P.
- PM
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shimself
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Post by shimself on Aug 18, 2016 12:58:55 GMT
Personally I don't see a problem of an intermediary so long as it holds all assets for investors, is not allowed to borrow and is bankruptcy remote from the platform.
I am all in favour of allowing the unsuccessful platforms to go bust, but not to take investors money with them. This would create a media storm that would hit all P2P. You express this as a past event, great, no problem there, my issue is it happening in the future.
My thoughts on "skin in the game" is above. How much would you like to see? I would expect a VC to require 20% on capital in a P2P company as expected return. They might take less if invested in the platform, but would certainly require a return significantly above the P2P loan returns that would need to be recouped in fees leaving less for the lenders.
I think your DD point is fair, although I do wonder whether that would reduce the attractiveness as an investor as speed of funds is a big advantage of P2P. This in turn would push more platforms into making the decisions for you like Flawed Concept that would be a sad loss to P2P.
- PM
Thanks for the comments Intermediary company - I don't know if you can make sense of Lendinvest's model, but it still seems to me that there is a danger of my loan in property A not being repaid because property B bankrupted the company and the receiver lumping all debts together. The other one I had in mind (SS) have now changed their model. How much skin in the game? - oh at least half their fee for getting the loan listed and funded. Enough to mean that it's bad business to promote bad loans. All listed p2x outfits have a wind up admninitration agreement so our investments in good loans "should" be protected. Pursuing the same point on ReBS board they suggested the FCA was against - I hope that's not true; in their case I think it was how they were doing it, which wasn't the same - (the key point being coinvested for the life of the loan, no offloading on the SM) speed of funds - I don't think 48 hours is material
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Post by propman on Aug 18, 2016 14:01:13 GMT
Thanks for the comments Intermediary company - I don't know if you can make sense of Lendinvest's model, but it still seems to me that there is a danger of my loan in property A not being repaid because property B bankrupted the company and the receiver lumping all debts together. The other one I had in mind (SS) have now changed their model. How much skin in the game? - oh at least half their fee for getting the loan listed and funded. Enough to mean that it's bad business to promote bad loans. All listed p2x outfits have a wind up admninitration agreement so our investments in good loans "should" be protected. Pursuing the same point on ReBS board they suggested the FCA was against - I hope that's not true; in their case I think it was how they were doing it, which wasn't the same - (the key point being coinvested for the life of the loan, no offloading on the SM) speed of funds - I don't think 48 hours is material I'm not familiar with how Lendinvest structures its loans.
My concern is that the wind up provisions don't go far enough. For instance I am not clear from RS's terms of business that I am the named lender for "my" portion of the loans. It seems that the rate of the loan is first agreed with the borrower and then funds are matched. Clearly the difference in rate will go to pay their fees and the agreed contribution to the provision fund. I am unclear what happens if there is a shortage of funds that leaves the receipt less than the amount due to lender and provision fund. Presumably RS pays the difference. As we do not have sight of the agreements, I do not know whether lenders have the right to the payment from the borrower, or merely a contractual right for RS to pay them. Similarly for the payments due to the PF. In the event that RS were to become insolvent, this distinction becomes important as I would not like to see these payments relegated behind liquidators fees and any other preferential RS creditors and equal to other ordinary creditors!
- PM
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Post by dualinvestor on Aug 18, 2016 14:22:02 GMT
Thanks for the comments Intermediary company - I don't know if you can make sense of Lendinvest's model, but it still seems to me that there is a danger of my loan in property A not being repaid because property B bankrupted the company and the receiver lumping all debts together. The other one I had in mind (SS) have now changed their model. How much skin in the game? - oh at least half their fee for getting the loan listed and funded. Enough to mean that it's bad business to promote bad loans. All listed p2x outfits have a wind up admninitration agreement so our investments in good loans "should" be protected. Pursuing the same point on ReBS board they suggested the FCA was against - I hope that's not true; in their case I think it was how they were doing it, which wasn't the same - (the key point being coinvested for the life of the loan, no offloading on the SM) speed of funds - I don't think 48 hours is material I'm not familiar with how Lendinvest structures its loans.
My concern is that the wind up provisions don't go far enough. For instance I am not clear from RS's terms of business that I am the named lender for "my" portion of the loans. It seems that the rate of the loan is first agreed with the borrower and then funds are matched. Clearly the difference in rate will go to pay their fees and the agreed contribution to the provision fund. I am unclear what happens if there is a shortage of funds that leaves the receipt less than the amount due to lender and provision fund. Presumably RS pays the difference. As we do not have sight of the agreements, I do not know whether lenders have the right to the payment from the borrower, or merely a contractual right for RS to pay them. Similarly for the payments due to the PF. In the event that RS were to become insolvent, this distinction becomes important as I would not like to see these payments relegated behind liquidators fees and any other preferential RS creditors and equal to other ordinary creditors!
- PM
AIUI the whole basis of P2P is that you have a contract with the borrower, i.e. behind RS contract no C******** is a Mr Z, and he owes you £x. If he fails to pay then, subject to the Provision Fund making up the difference, there is a potential loss. If it were any other way, e.g. the same contract to a portfolio of borrowers, you would be taking part in a pooled invetment or "collective investment Scheme." As none of the P2P platforms are suthorised to operate such a scheme I doubt it is the latter. In fact I believe some of the platforms changed their terms and conditions fairly recently to take that into account. None of the platforms, as far as I am aware, is a Licensed Deposit Taker so the borrowers funds are always separate from the platform, whether represented by loans or cash. Edit Although by some of their behaviour, particulary in the case of early redemptions by the lender, RS does behave as though it is operating a "collective investment scheme"
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Post by lb on Aug 18, 2016 14:40:11 GMT
AIUI the whole basis of P2P is that you have a contract with the borrower, i.e. behind RS contract no C******** is a Mr Z, and he owes you £x. If he fails to pay then, subject to the Provision Fund making up the difference, there is a potential loss. If it were any other way, e.g. the same contract to a portfolio of borrowers, you would be taking part in a pooled invetment or "collective investment Scheme." As none of the P2P platforms are suthorised to operate such a scheme I doubt it is the latter. In fact I believe some of the platforms changed their terms and conditions fairly recently to take that into account. None of the platforms, as far as I am aware, is a Licensed Deposit Taker so the borrowers funds are always separate from the platform, whether represented by loans or cash. Edit Although by some of their behaviour, particulary in the case of early redemptions by the lender, RS does behave as though it is operating a "collective investment scheme" P2P platforms are exempt from CIS www.quidcycle.com/blogs/2015/12/24/p2p-end-year-high-note
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Post by dualinvestor on Aug 18, 2016 14:48:46 GMT
AIUI the whole basis of P2P is that you have a contract with the borrower, i.e. behind RS contract no C******** is a Mr Z, and he owes you £x. If he fails to pay then, subject to the Provision Fund making up the difference, there is a potential loss. If it were any other way, e.g. the same contract to a portfolio of borrowers, you would be taking part in a pooled invetment or "collective investment Scheme." As none of the P2P platforms are suthorised to operate such a scheme I doubt it is the latter. In fact I believe some of the platforms changed their terms and conditions fairly recently to take that into account. None of the platforms, as far as I am aware, is a Licensed Deposit Taker so the borrowers funds are always separate from the platform, whether represented by loans or cash. Edit Although by some of their behaviour, particulary in the case of early redemptions by the lender, RS does behave as though it is operating a "collective investment scheme" P2P platforms are exempt from CIS www.quidcycle.com/blogs/2015/12/24/p2p-end-year-high-note What do you mean? If you mean they are not CIS then I agree provided they operate as P2P, but I don't think they are allowed to operate one,
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Post by lb on Aug 18, 2016 15:07:42 GMT
What do you mean? If you mean they are not CIS then I agree provided they operate as P2P, but I don't think they are allowed to operate one, if a site is approved by the FCA as an electronic lending platform then by definition it isn’t operating a CIS
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