pikestaff
Member of DD Central
Posts: 2,188 
Likes: 1,546
|
Post by pikestaff on Nov 4, 2016 12:13:24 GMT
It will be the party named in the "living will", which will have been approved by the FCA. I would not expect any direct cost to the lender because the administration costs should be covered out of the spread on the loan. However, recoveries may go down because (1) some borrowers will think they can get away with it and (2) as @mcrlondon notes, there is no reason for the administrator to go the extra mile. Also, there won't be a secondary market so you will be locked in for the duration. Unless you are lucky and another platform steps in, which (as easteregg says) might happen, but I would not count on it. Those platform T&Cs that I have read bind lenders in to using the platform or their agent, which I think would include the administrator, so you would be precluded from doing it yourself even if you wanted to.
|
|
bigfoot12
Member of DD Central
Posts: 1,817
Likes: 816
|
Post by bigfoot12 on Nov 4, 2016 12:15:27 GMT
My working assumption is more pessimistic than mrclondon . Recoveries often take many years - I think that it is unlikely that many of the provisions made will allow for this. I think the best hope is that it is sold to a debt recovery company, probably for a significant discount to 'fair value'. I would also expect defaults to increase, and defaults were probably higher in any case which might be part of the reason the company failed. I assume double the regular default rate with no recoveries in the case of unsecured, and a higher default rate but with 50% recoveries on secured loans. I will be relieved if anything better than this is returned to me after a platform failure. (I assume this based on no professional knowledge or experience other than reading this forum.) Of course a platform might fail because there is a catastrophic IT failure and they can't work out who is owed what, or fraud, or regulatory failure such that the borrower doesn't have to pay back! Edit:crossed with pikestaff |
|
|
|
Post by andrewholgate on Nov 4, 2016 12:47:02 GMT
I have considered this. AC forms a little over 5% of my portfolio and the risk of loosing half of it is acceptable. "Requirement is to have a back up servicing company in place in case of platform failure. They would handle the loans." Who will fund the servicing company if the parent company is in administration and has debts to pay? Who says you will lose half of your money with AC? To date we have lost c£1m from £175m lent.
|
|
|
|
Post by valueinvestor123 on Nov 4, 2016 13:09:27 GMT
I have considered this. AC forms a little over 5% of my portfolio and the risk of loosing half of it is acceptable. "Requirement is to have a back up servicing company in place in case of platform failure. They would handle the loans." Who will fund the servicing company if the parent company is in administration and has debts to pay? Who says you will lose half of your money with AC? To date we have lost c£1m from £175m lent.  Just been through this on the other thread on AC's board... I emboldened the bit which hopefully is self-explanatory. Am I really the only insane person in this asylum who thinks that during economic strain or a full blown crash defaults will rise and recovery rates will drop when risk repricing occurs? 
|
|
Just been through this on the other thread on AC's board... I emboldened the bit which hopefully is self-explanatory.