bulletbill
Member of DD Central
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Post by bulletbill on Nov 6, 2019 14:02:10 GMT
I believe Lendy, in particular, was always set up to go out of business very profitably. I believe that was always the intention.
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Post by brightspark on Nov 6, 2019 16:29:41 GMT
Fantastic summary. My follow up question would be which regulatory body charged with protecting consumers from shysters like LB would review this business model and give it a green light. The FCA frankly don’t care whether a business model or investment is shitty or has a fundamental conflict of interest. FCA regulation and “protecting consumers” within the P2P sector was essentially a very limited box ticking exercise for the most part. As samford71 eloquently put: “the FCA does not exist to ensure a retail investor's investments make a profit, nor is the FCA there to ensure that financial service business doesn't fail or that the business plan is sound. It could be a rubbish investment; it could be a rubbish business model. P2P as a concept may be fundamentally flawed. Not their problem. The only question for the FCA is does it meet the regulations. In the case of P2P, the government's requirement for 'light touch' regulation ensured the regulations were far less stringent that for any other part of the financial services sector. Capital requirements for P2P platforms were minimal. Operational controls were light. Directors and employees prior experience could be limited or non-existent. As "FinTechs", the business model focussed on maximizing origination volumes over loan quality. This helped them secure equity capital and gave them upfront fees but also ensured downstream issues with large NPL portfolios. Regulation taken from the bilateral lending market ensured the "treating your customer fairly" meant treating the borrower too easily and not giving a damn about the lender. Lenders are just capital providers; they were never the clients.”
Unfortunately FCA “regulation” offers a veneer of credibility to the wider public (when in reality it means very little) but the FCA are also just enforcers of wider governmental policy. The real mistake in my eyes was the governments decision to lump P2P into the “light touch” regime in the first place due to the UK’s apparent wish to not stifle “FinTech” innovation and assuming that there wouldn’t be any bad actors. Doing so has allowed incompetent, unqualified and unethical people to roam free with hundreds of millions of pounds of other people’s money, without real checks or supervision, for principally their own benefit and in direct conflict with the interests of investors. If there had been stricter requirements on P2P businesses from the outset (similar to those placed on challenger banks like Monzo or Starling who are also entrusted to manage hundreds of millions of third-party capital) the P2P industry as a whole would be in a much better place than it is currently. That begs the question why? It was opening the pandoras box of light touch that allowed catastrophes such as are being experienced, to occur. Remaining platforms can claim that they are not so similarly minded but if the rules do not exclude such enterprises how can lenders be reassured. The FCA Regulations provide useless respectability to a Wild West industry. The whole thing suggests the City is too cosy with politicians of all persuasions.
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Post by patright on Nov 7, 2019 16:27:37 GMT
Stupid question but is DFL012 now considered to be "done"
I mean is 45% all we are going to get?
I am not a native speaker so I should not have gotten involved probably with P2P in English but before it was fairly easy to understand, now it's above my understanding
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quidco
Member of DD Central
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Post by quidco on Nov 7, 2019 16:39:57 GMT
Stupid question but is DFL012 now considered to be "done" I mean is 45% all we are going to get? I am not a native speaker so I should not have gotten involved probably with P2P in English but before it was fairly easy to understand, now it's above my understanding It was labelled an "interim" payment which would imp[ly that it's not the "final" payment; what that would amount to or when it would be paid hasn't as far as I'm aware been communicated.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 11,330
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Post by ilmoro on Nov 7, 2019 16:54:59 GMT
Stupid question but is DFL012 now considered to be "done" I mean is 45% all we are going to get? I am not a native speaker so I should not have gotten involved probably with P2P in English but before it was fairly easy to understand, now it's above my understanding Possibly done as far as the direct security goes but other assets may be available as far as the PG goes. Borrower principal has extensive interests in various developments incl several in Lpool, just have to pursue him (figuratively & quite possibly literally) Elbows may be required for RSM to get to the front of the IP queue.
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toffeeboy
Member of DD Central
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Post by toffeeboy on Nov 7, 2019 16:57:31 GMT
Stupid question but is DFL012 now considered to be "done" I mean is 45% all we are going to get? I am not a native speaker so I should not have gotten involved probably with P2P in English but before it was fairly easy to understand, now it's above my understanding The updates mention claims against professional bodies and also a personal guarantee. There is also the matter of the missing couple of million from the sale proceeds that Lendy/RSM have claimed for themselves.
This one isn't done yet but when another payment might be made is unknown, I don't think it will be any time soon.
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Post by brightspark on Nov 7, 2019 17:26:49 GMT
I reckon that those who know about these things are fairly sure in their own minds that there will not be much more to come. Looking at it from another angle 45% is probably just about enough to make all but larger investors shrug their shoulders and move on or at least to decide to bide their time. 6 months on for most it will be history that left a bitter taste.
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sl75
Posts: 2,092
Likes: 1,245
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Post by sl75 on Nov 8, 2019 10:11:03 GMT
I reckon that those who know about these things are fairly sure in their own minds that there will not be much more to come. Looking at it from another angle 45% is probably just about enough to make all but larger investors shrug their shoulders and move on or at least to decide to bide their time. 6 months on for most it will be history that left a bitter taste. Other platforms continue to extract recovery payments for several years (although unsecured personal loans are an entirely different market, I'm still getting recovery payments from my first year of lending at Zopa in 2008, and from my first year of Funding Circle business loans in 2010).
I realise that the dynamics change when the responsibility for a loan book rundown switches to a third-party operator rather than being just part of a larger managed loan book, but ensuring such a run-down operation would be properly funded was one of the requirements of gaining FCA authorisation, and can be separated from the administration of Lendy itself once RSM have dealt with that.
Until or unless a payment is received in "full and final settlement", or an official receiver or similar indicates that is "no prospect of further recovery" on a particular loan, I would expect the run-down operator to continue to explore all reasonable avenues for making further recoveries, even if these do take several years to realise.
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Post by rhea117 on Nov 8, 2019 11:58:52 GMT
Thanks - do you think in these "several years" the legal costs will eat up much of the recovery?
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Post by tigerbalm on Nov 8, 2019 12:14:15 GMT
How long is a piece of string ?
It certainly isn't going to be a process without end as I understand they have to justify measures they take. I would be surprised if the recovery expenses were greater than 5% of the amount recovered but that is just a personal opinion.
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Greenwood2
Member of DD Central
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Post by Greenwood2 on Nov 8, 2019 12:44:38 GMT
The FCA frankly don’t care whether a business model or investment is shitty or has a fundamental conflict of interest. FCA regulation and “protecting consumers” within the P2P sector was essentially a very limited box ticking exercise for the most part. As samford71 eloquently put: “the FCA does not exist to ensure a retail investor's investments make a profit, nor is the FCA there to ensure that financial service business doesn't fail or that the business plan is sound. It could be a rubbish investment; it could be a rubbish business model. P2P as a concept may be fundamentally flawed. Not their problem. The only question for the FCA is does it meet the regulations. In the case of P2P, the government's requirement for 'light touch' regulation ensured the regulations were far less stringent that for any other part of the financial services sector. Capital requirements for P2P platforms were minimal. Operational controls were light. Directors and employees prior experience could be limited or non-existent. As "FinTechs", the business model focussed on maximizing origination volumes over loan quality. This helped them secure equity capital and gave them upfront fees but also ensured downstream issues with large NPL portfolios. Regulation taken from the bilateral lending market ensured the "treating your customer fairly" meant treating the borrower too easily and not giving a damn about the lender. Lenders are just capital providers; they were never the clients.”
Unfortunately FCA “regulation” offers a veneer of credibility to the wider public (when in reality it means very little) but the FCA are also just enforcers of wider governmental policy. The real mistake in my eyes was the governments decision to lump P2P into the “light touch” regime in the first place due to the UK’s apparent wish to not stifle “FinTech” innovation and assuming that there wouldn’t be any bad actors. Doing so has allowed incompetent, unqualified and unethical people to roam free with hundreds of millions of pounds of other people’s money, without real checks or supervision, for principally their own benefit and in direct conflict with the interests of investors. If there had been stricter requirements on P2P businesses from the outset (similar to those placed on challenger banks like Monzo or Starling who are also entrusted to manage hundreds of millions of third-party capital) the P2P industry as a whole would be in a much better place than it is currently. That begs the question why? It was opening the pandoras box of light touch that allowed catastrophes such as are being experienced, to occur. Remaining platforms can claim that they are not so similarly minded but if the rules do not exclude such enterprises how can lenders be reassured. The FCA Regulations provide useless respectability to a Wild West industry. The whole thing suggests the City is too cosy with politicians of all persuasions. Before there was light touch regulation there was no regulation and apparently a large number of potential P2P platforms gave up trying to launch once permission was required (or they applied and then dropped the application) so because of regulation we may have escaped some of the worst potential platforms. I think the early platforms were very legitimate, but then the idea was picked up by every Tom, Dick and Harry, some of whom seem to have no regard for lenders, or borrowers in some cases. When regulation was being proposed I seem to remember that lenders (including me) were strongly against heavy handed regulation, hindsight is a wonderful thing!
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jhamster
Member of DD Central
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Post by jhamster on Nov 8, 2019 12:51:24 GMT
The 45% means a 23k loss for me.
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jonno
Member of DD Central
nil satis nisi optimum
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Post by jonno on Nov 8, 2019 13:27:09 GMT
The 45% means a 23k loss for me. Yikes! not good. Is this level of investment representative across a number of Lendy loans or did you put all your eggs in a somewhat risky basket?
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jhamster
Member of DD Central
Posts: 107
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Post by jhamster on Nov 8, 2019 13:32:46 GMT
The 45% means a 23k loss for me. Yikes! not good. Is this level of investment representative across a number of Lendy loans or did you put all your eggs in a somewhat risky basket? Across a number of others, equally as bad.
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Post by rhea117 on Nov 8, 2019 13:32:46 GMT
The 45% means a 23k loss for me. That is bad! I hope they recover more or at least release a second payment from the "unaccounted" c£2m.
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