upland
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Post by upland on Dec 27, 2016 13:49:41 GMT
I read that the pre-funding of loans prior to their being listed on the platform is a problem as this has been deemed by the regulator as falling outside of 36H and so not suitable for retail investment. Will this cause a problem in future with platforms wishing to acquire the full FCA authorisations. I would greatly appreciate some comment from forum members whose understanding is better than mine.
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SteveT
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Post by SteveT on Dec 27, 2016 14:13:33 GMT
I believe you're right and that, prior to securing their full FCA authorisation, the remaining platforms that initially fund loans themselves will switch to advancing funds only once loans have been filled.
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upland
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Post by upland on Dec 27, 2016 14:17:49 GMT
Indeed , there has just been an article on AltFi that Landbay have just achieved it so I was wondering who in the great and the good would it affect most ?
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Dec 27, 2016 14:43:15 GMT
There is probably a get-around. If the platform sets up a separate company (SPV) operating simply as an underwriter, then the problem goes away.
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Dec 27, 2016 14:48:42 GMT
I am wondering which asset classes will be compromised by this. The statement on Altfi looks at Landbay who, if I understand correctly, acquire btl properties sung their own capital or institutional money, then allow retail investors to take parts of the loan over. Anyone confirm this please?
If you take this to other assets where does it stop? Pawnbroker loans col, unb, are normally first purchased then offered. Companies taking retail money then allocating parts of loans n their books, purchased from their cash e.g bm? Steve Findlay care to comment please?
Would rollovers, in any class, fall under this trap?
From my initial reading of fca rule 36h it looks to be focused on the new isa product and those that offer advice on including p2p or p2b products under the is a wrapper.
The water has, as usual, been made more muddy by regulation introduction.
As an aside, I wonder if the UK government has checked that Intelligent Finance are happy to hand over their product name to a generic product without compensation? Recently discovered I have an old IFISA with pocket fluff in there. I wonder if the IFISA accepts transfers from an IFISA when they start?....
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james
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Post by james on Dec 27, 2016 16:47:41 GMT
I read that the pre-funding of loans prior to their being listed on the platform is a problem as this has been deemed by the regulator as falling outside of 36H and so not suitable for retail investment. Will this cause a problem in future with platforms wishing to acquire the full FCA authorisations. I would greatly appreciate some comment from forum members whose understanding is better than mine. The prefunding loan cannot be 36h. I see little reason why a platform cannot prefund using its own capital above regulatory minimum then have the replacement borrowing funded by consumers be 36h. Above regulatory minimum is so that platform is safe enough if it has to keep the loan on its own books and then has a default. There is a conflict of interest to manage between the platform desire to get a loan refinanced and its marketing accuracy and other obligations to 36h lenders. The altfi story says: " Until recently, all loans on the Landbay platform were pre-funded by an institutional partner, and these loans were then effectively refinanced by individual investors. Over the past few months, however, the firm has been forced to make changes to its approach to suit the regulator’s requirements and to remain 36H eligible. Landbay no longer pre-funds loans.
This shows a clear sign of intent from the regulator. It suggests that the days of platforms pre-funding or part-funding loans using either their own money or institutional capital are numbered. There is still a significant role for institutional capital to play within the sector, but it would appear that it will need to be kept wholly separate from retail capital (i.e. funding whole loans only) in order to satisfy the regulator." Notice the bit about part-funding and whole loans only, as distinct from 100% refinancing. Though of course the FCA could choose to add a restriction not enshrined in law that changes the current meaning of what P2P is, instead of implementing existing P2P within the law. I'd then support platforms in seeking a change in the law to bar the FCA from redefining what P2P is in that way.
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