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Post by reeknralf on Dec 31, 2016 12:37:31 GMT
In addition to the above, AC probably can't specify exactly how a collapse would be managed, because they are playing a catch-22 game of regulatory arbitrage which precludes it. They are in essence providing a savings account, but do not have the regulatory approval to provide an actual savings account. What stops it being a true savings account is its having a discretionary fund to compensate investors in loss-making loans. If they stated clearly how such compensation would operate, it would cease to be discretionary, and they would be providing a product for which they don't have the necessary authorisation. The fact that they are not telling us how a collapse would be managed is not because they don't know, it's because if they told us the product would become illegal. All true but irrelevant to my question which is about the scenario that there is a default bigger than the PF. I'm very sorry you feel I haven't adequately addressed your question. I'm afraid I am unable to provide a better answer.
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bababill
Member of DD Central
Posts: 529 
Likes: 245
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Post by bababill on Jan 2, 2017 23:42:27 GMT
The biggest issue I see is an IT problem.
AC already have admitted with loan 331
"There is a glitch in the ledger that we are trying to sort. Sometimes gremlins are hard to find."
So the risk of contagion could spread to QAA. I have seen this happen on Funding Knight and for months various accounts on the secondary market got locked up. Result was a lot of people ended up loosing money because a lot of those loans defaulted but we could not sell when DD started to tell you certain loans were going toxic.
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Post by andrewholgate on Jan 3, 2017 9:00:54 GMT
In addition to the above, AC probably can't specify exactly how a collapse would be managed, because they are playing a catch-22 game of regulatory arbitrage which precludes it. They are in essence providing a savings account, but do not have the regulatory approval to provide an actual savings account. What stops it being a true savings account is its having a discretionary fund to compensate investors in loss-making loans. If they stated clearly how such compensation would operate, it would cease to be discretionary, and they would be providing a product for which they don't have the necessary authorisation. The fact that they are not telling us how a collapse would be managed is not because they don't know, it's because if they told us the product would become illegal. In terms of the product becoming "illegal" that is down to the FCA and we continue dialogue with them about full permissions. If the FCA had any concerns we would know about it. As yet they have not said we are doing anything "illegal" or playing arbitrage.
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Post by reeknralf on Jan 3, 2017 9:30:32 GMT
In addition to the above, AC probably can't specify exactly how a collapse would be managed, because they are playing a catch-22 game of regulatory arbitrage which precludes it. They are in essence providing a savings account, but do not have the regulatory approval to provide an actual savings account. What stops it being a true savings account is its having a discretionary fund to compensate investors in loss-making loans. If they stated clearly how such compensation would operate, it would cease to be discretionary, and they would be providing a product for which they don't have the necessary authorisation. The fact that they are not telling us how a collapse would be managed is not because they don't know, it's because if they told us the product would become illegal. In terms of the product becoming "illegal" that is down to the FCA and we continue dialogue with them about full permissions. If the FCA had any concerns we would know about it. As yet they have not said we are doing anything "illegal" or playing arbitrage. Fair comment. I should have chosen my terms more carefully. 'Regulatory arbitrage' is unduly loaded. Whilst I regret the wording, I stand by the essence of my post, which you have chosen not to comment on. Does the current regulatory regime allow you to specify precisely how and to whom the provision fund would be distributed in the event of a collapse?
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Post by andrewholgate on Jan 3, 2017 9:40:09 GMT
reeknralf As I stated, we are working with the FCA at present on a number of matters. We believe we operate within the spirit and the letter of the regulatory regime and it is for the FCA to decide if we do or don't. I will say that we are following all discussions here about the QAA and we are looking at possible amendments to disclosure and information alongside working with the FCA on what they require (if anything).
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