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Post by dualinvestor on Aug 19, 2016 15:31:57 GMT
I have seen this point made before and it is incorrect. People can only sell out if there is someone to buy the loan part off them. There is no need for a penalty whatsoever. Why would anyone lend in a 3yr market if they can lend in a 5yr market at a higher rate and exit after 3yrs with no penalty? Result no 3yr market, and a fall in rates on the 5yr market as it becomes an up to 5yr market. Not that you intended yoour comment it that way but RS are closing the 3 year market in October anyway  On a general point this thread is filling up with "noise" that might be better in individual threads on the appropriate platform boards rather than salient points for the FCA to consider.
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Post by Deleted on Aug 19, 2016 15:35:10 GMT
Why would anyone lend in a 3yr market if they can lend in a 5yr market at a higher rate and exit after 3yrs with no penalty? Result no 3yr market, and a fall in rates on the 5yr market as it becomes an up to 5yr market. Right. So using your logic, a market in 2-year bonds cannot possibly exist because people can invest for 5 years at higher rates and sell after 3 years with no penalty. Except... a market in 2-year bonds does exist. People invest at different maturities for all kinds of reasons. Even with a secondary market in place, there is no guarantee that you can sell out a longer-term investment. There still has to be a willing buyer. What makes no sense (for customers anyway) is penalising the seller for wanting to sell to a willing buyer at a price that could give the new buyer a great bargain.
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SteveT
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Post by SteveT on Aug 19, 2016 18:20:31 GMT
Do you guys realise that your squabble debate over the precise mechanics of Ratesetter's withdrawal options is being broadcast across every forum board in a thread supposed to be about the FCA's request for input? How about heading on over to the RS board to continue your riveting discourse?
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Post by Deleted on Aug 19, 2016 20:33:20 GMT
Apologies, it started with a couple of posters suggesting that this topic might be of relevance/interest to the FCA. So it was on topic for at least a little while  |
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gt94sss2
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Post by gt94sss2 on Aug 20, 2016 20:08:21 GMT
Getting back on topic - a few ideas (one or two may already have been mentioned):
1. Platforms should provide timely updates on the status of loans to all registered on a platform - not sit on information or only provide it to a subset of their users (i.e. just those invested in a loan at a specific point);
2. Linked to 1, Platforms should do their best to display accurate estimates of time outstanding before a loan is expected to be repaid;
3. Share any Q&A relating to a loan to all registered users - not just the person who asked the question;
4. Set a minimum time for users to consider new loan proposals before a loan goes live/becomes tradable to allow time for proper due diligence;
5. Having fixed/common rules over when a platform can suspend SM trading in a specific loan and for how long;
6. Platforms must market their loans to all investors on an equal basis. No objection to platforms having introductory offers for new customers or offering cashback on a specific loan to all but they should not be allowed to offer different rates of return to different investors on the same investment;
7. Linked to 6, platforms should not be allowed to offer or market loans to a subset of investors or approach some before others but should offer them to all registered users (i.e. in a public way - i.e. via their website instead of saying email us for information)
8. The FCA should set maximum times a platform has for registering a deposit from a customer and to pay withdrawal requests;
9. Clear sanctions in place for where a platform is late crediting investor accounts with repayments of capital/interest where the delay lays with the platform and is not a late payment from the borrower;
10. Clear disclosure rules covering when platforms make loans to companies they a) have a business relationship with. b) are related to them somehow (friends/family) or c) which share personnel/resources (say a common director) with the platform. The rules should cover how to avoid conflicts of interest with the platform legally bound to act in the interest of lenders in such cases;
11. platforms should have living wills; and
12. Funds in provision funds - even where discretionary - should not be used for any other purposes and should be secured in such a way that creditors cannot get those funds if the platform was to experience issues
Edit:
13. May not be in the remit of the FCA but having a common set date by which all P2P platforms should provide accurate details of interest/certificate of interest paid to enable investors to complete tax returns if they are requested to do so (including a deadline to resolve any subsequent queries raised in the case of potential errors).
14. Clearly identifying loans which share something in common (i.e. they are to the same borrower as other loans on the platform)
Would welcome the thoughts of others on the above.
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shimself
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Post by shimself on Aug 21, 2016 11:36:17 GMT
re 6 Underwriters deserve special treatment so the detail needs thinking about
re 10 Make stronger
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ablender
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Post by ablender on Aug 21, 2016 15:00:22 GMT
re 6 Underwriters deserve special treatment so the detail needs thinking about re 10 Make stronger If a platform uses underwriters, they have to be classified as such and act as underwriters to fill any part of the loan that does not fill, not to under bid and reject other lenders. Hint, hint Lending Crowd. (Described as "people known to us")
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metoo
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Post by metoo on Aug 21, 2016 15:23:07 GMT
Would welcome the thoughts of others on the above. Comments: 1, 3. Agree strongly - essential so all lenders can have an overall understanding of risks on the platform, something the FCA is concerned about. 2. Difficult - can platforms really know this, and where rests the liability for being wrong? 4. Agree. If the platform allows for lenders to take their own decisions, there should be time for lenders to assess the risk. This also allows lenders to get a feel for the type of risk they are taking generally on a p2p platform. Pooled lending and autobidding leave all the responsibility for risk assessment with the platform. Realistically, mass market p2p is not going to involve most lenders doing DD due to the time and effort it takes, but DD time should be available. Where DD is permitted, errors in information and currentness can be issues. On property loans, professional RICS surveyors’ reports are held, but platforms have different policies on whether these can be seen by lenders. As some platforms do share RICS reports, it seems firms of surveyors and the borrowers can permit this. There is scope for error and obfuscation where surveyor's reports are not made available so it should be required practice, with redactions of sensitive information only in exceptional circumstances. 5. Interesting. Not sure how that one would play out. Might become more restrictive than necessary? In general, trading should be permitted with full disclosure once the position is clear. Gives a problem where autobid is the buyer unless autobid is blocked where disclosure of a live issue has been made. 10. Agree strongly. Transparency and fairness are important. Cherry-picking must not be possible. 12. Agree strongly. Provision funds are a difficult area in risk management and risk communication / understanding by lenders. It's essential they cannot be taken for any other purpose. 14. Should be a requirement. Essential to lenders’ understanding of and ability to manage their risk, whether manually or automated.
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Post by Admin on Sept 1, 2016 12:03:36 GMT
As some of you will already be aware, the FCA is currently reviewing its regulation of P2P lending and equity crowdfunding platforms, and their call for input published in late July has been discussed on a previous thread. The FCA have now approached the forum directly to try to understand what risks forum members see for investors on such platforms. They have said they will value some first-hand insights into how the crowdfunding market works from an investor perspective and believe that we are likely to spot emerging problems first. If you would like to provide evidence to the FCA’s policy team about their regulation of crowdfunding platforms, and what you think needs to change, you can email directly to crowdfundingcfi@fca.org.ukFor a sense of the issues that the FCA is concerned about, you can read their Call for Input here. However, you don’t need to respond to the specific questions in the paper – you can focus on whatever you think is most urgent, e.g. • Are there investment opportunities on p2p lending or equity crowdfunding sites that are unsuitable for anyone without substantial knowledge, experience and expertise? • What specific changes could the FCA make to the rules that the platforms are subject to, to help increase your confidence in the sector? Finally, if you have evidence of specific cases where platforms are acting inappropriately, you can use the same email address to report this to the FCA. Remember that many of these platforms are still in the process of being authorised; if you have any evidence that the FCA should take into account in assessing firms for authorisation, consider sending this to them. Just a quick reminder that the FCA's Call for Input web page requested that comments are received by Thursday 8th September.
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ablender
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Post by ablender on Sept 1, 2016 16:04:47 GMT
Admin Is it possible for all this text to be sent directly to FCA, in case individuals did not email it themselves?
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Post by Admin on Sept 1, 2016 16:11:26 GMT
Admin Is it possible for all this text to be sent directly to FCA, in case individuals did not email it themselves? Whilst it is very likely that one or more members of FCA staff are keeping an eye on this thread, it is up to individual lenders to make their own reasoned case to the FCA. TBH this thread is more a brainstorm of headlines that need fleshing out, and in some cases opposing points of view are being articulated by different posters which makes it impossible to tell which is the prevailing view amongst lenders.
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Post by westonkevRS on Sept 6, 2016 20:27:55 GMT
I'm in two minds about "skin in the game". On the one hand, as locutus says, if platforms have to invest their own capital in loans it does a wonderful job of aligning platform and lender interests. On the other hand it would put pressure on their balance sheets, which would a) reduce profitability, b) limit the amount of loans brought to market, and c) stop platforms from being "pure intermediaries". Another issue is regulatory permissions. If platforms have " skin in the game" then they are 'Lending In The Course of Business', LiTCoB. Things start to get complicated, as it's no longer pure P2P....
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shimself
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Post by shimself on Sept 6, 2016 23:33:53 GMT
The law may be an ass, it doesn't make it a bad idea.
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pikestaff
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Post by pikestaff on Sept 7, 2016 7:35:26 GMT
The law may be an ass, it doesn't make it a bad idea. My personal view is "skin in the game" is a terrible idea. Platforms are thinly capitalised and would not survive meaningful losses. Platform risk would go through the roof. Unless you want the FCA to make the platforms more like banks, with sufficient regulatory capital to support their share of losses? They would need a lot of capital relatively speaking, because the platforms are much less diversified than the banks. If it could be found (doubtful), it would be very expensive. Or I suppose they might buy insurance, ditto.
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pikestaff
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Post by pikestaff on Sept 7, 2016 8:50:42 GMT
Getting back on topic - a few ideas (one or two may already have been mentioned): 1. Platforms should provide timely updates on the status of loans to all registered on a platform - not sit on information or only provide it to a subset of their users (i.e. just those invested in a loan at a specific point); 2. Linked to 1, Platforms should do their best to display accurate estimates of time outstanding before a loan is expected to be repaid; 3. Share any Q&A relating to a loan to all registered users - not just the person who asked the question; 4. Set a minimum time for users to consider new loan proposals before a loan goes live/becomes tradable to allow time for proper due diligence; 5. Having fixed/common rules over when a platform can suspend SM trading in a specific loan and for how long; 6. Platforms must market their loans to all investors on an equal basis. No objection to platforms having introductory offers for new customers or offering cashback on a specific loan to all but they should not be allowed to offer different rates of return to different investors on the same investment; 7. Linked to 6, platforms should not be allowed to offer or market loans to a subset of investors or approach some before others but should offer them to all registered users (i.e. in a public way - i.e. via their website instead of saying email us for information) 8. The FCA should set maximum times a platform has for registering a deposit from a customer and to pay withdrawal requests; 9. Clear sanctions in place for where a platform is late crediting investor accounts with repayments of capital/interest where the delay lays with the platform and is not a late payment from the borrower; 10. Clear disclosure rules covering when platforms make loans to companies they a) have a business relationship with. b) are related to them somehow (friends/family) or c) which share personnel/resources (say a common director) with the platform. The rules should cover how to avoid conflicts of interest with the platform legally bound to act in the interest of lenders in such cases; 11. platforms should have living wills; and 12. Funds in provision funds - even where discretionary - should not be used for any other purposes and should be secured in such a way that creditors cannot get those funds if the platform was to experience issues Edit: 13. May not be in the remit of the FCA but having a common set date by which all P2P platforms should provide accurate details of interest/certificate of interest paid to enable investors to complete tax returns if they are requested to do so (including a deadline to resolve any subsequent queries raised in the case of potential errors). 14. Clearly identifying loans which share something in common (i.e. they are to the same borrower as other loans on the platform) Would welcome the thoughts of others on the above. 1. It depends what you mean. Timely update that there is a problem, yes. Details of the problem, perhaps not. Disclosure can work against lenders' interests while a problem is being worked out (at least until there is something to vote on). Also platforms with more open policies may find it harder to attract borrowers, who would prefer problems to be worked out in private. I'm thinking mainly of p2b here. Clearly, the less open the policy the tighter the rules on SM trading must be. 2. Heavily caveated, perhaps. But depending on the nature of the problem this may not be possible. 3. Broadly agreed but I'd expect platforms to retain the right to moderate/delete Qs they deem unacceptable. A person unhappy with the moderation/deletion of a Q should have an appeal route. 4. Agreed where relevant. 5. I do not think the FCA should be requiring a consistent SM policy across platforms, but all platforms should have a policy and they should apply their policy consistently. 6. I have no problem with differential terms or fees being offered to underwriters or large bidders, but these should be disclosed. 7. See above, but cherry-picking is a worry. Whether it should be prohibited or merely disclosed (this loan has been rejected by xxx) is debatable. There's a case for the latter. 8. Not sure we need the FCA for this. Platforms should have service standards and stick to them. 9. As above. Perhaps the FCA could require interest to be paid by the platforms (at the loan rate) when the delay beyond the normal processing time is their fault. 10. Sort of agreed. All platforms should have a clear policy on conflicts of interest. Some should simply be avoided. 11. Already a requirement. 12. I agree that provision funds should be held by a bankruptcy-remote vehicle. However, the funds have to be invested somewhere. The investment income ultimately either strengthens the fund or reduces the amount that has be be paid in, thereby reducing the overall spread that lenders suffer. There was a recent fuss about a small part of the RS provision fund being used for underwriting. Because of the way that a resolution event works on RS I thought this was fine but it looked bad and they have stopped doing it. I do think that all provision funds should have an investment policy and this should be published. The FCA should consider requiring lender representation on funds' management boards (similar to a company pension fund).
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