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Post by mandywr on Mar 3, 2017 11:10:16 GMT
I am trying to find the contract, as a lender, that I have with the p2p platforms through which I have lent. I assume there is such a contract that obliges the p2p company to collect any interest and capital repayments from the borrowers and to pass it on, as appropriate, to the lenders, and, where necessary, to take action on defaulting borrowers.
It is probably embedded in the terms and conditions of each platform but I cannot find it. All I can find are clauses that protect the platform from the lender!! It appears from their answers to my query that, if they fail to pass on the repayments and interest that borrowers pay to them, I will have no redress in law. It this correct?
The companies in question are
Folk2folk; Thincats; FundingCircle and Funding Knight.
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adrianc
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Post by adrianc on Mar 3, 2017 16:13:28 GMT
I am trying to find the contract, as a lender, that I have with the p2p platforms through which I have lent. I assume there is such a contract that obliges the p2p company to collect any interest and capital repayments from the borrowers and to pass it on, as appropriate, to the lenders, and, where necessary, to take action on defaulting borrowers. It is probably embedded in the terms and conditions of each platform but I cannot find it. All I can find are clauses that protect the platform from the lender!! It appears from their answers to my query that, if they fail to pass on the repayments and interest that borrowers pay to them, I will have no redress in law. It this correct? The companies in question are Folk2folk; Thincats; FundingCircle and Funding Knight. I dunno about the others, since I'm not a user of them, but the relevant parts of FC's Ts & Cs are... www.fundingcircle.com/terms-and-conditionsTs & Cs for investorsand Loan conditionsSo the legal obligation isn't on the platform - they're merely an intermediary between the borrower and the lender. The actual obligation is on the borrower themselves. If the borrower doesn't repay the principal and interest due, then the agreements authorise the platform to act as the lender's agent in chasing up the borrower and enforcing whatever security. The legal redress is still between the borrower and the lender directly. Any redress you would have against the platform for lax chasing would be fairly i-dotting-t-crossing on the basis that they were failing in a duty of care as the agent. And, if you've been anywhere near the FC forums on here, you'll know that's basically not a million miles from being situation normal...
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Post by mandywr on Mar 4, 2017 18:32:33 GMT
If I have correctly understood, if the agent is paid by the borrower as agreed and the agent fails to pass the payment on, there is no legal way to enforce the correct behaviour by the agent
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ablender
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Post by ablender on Mar 5, 2017 9:35:56 GMT
Isn't this one of the reasons why platforms have to be regulated by FCA. That sounds to me as misappropriation of funds.
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Post by charles on Mar 5, 2017 13:02:34 GMT
Isn't this one of the reasons why platforms have to be regulated by FCA. That sounds to me as misappropriation of funds. I would agree with adrianc on his point. This is where P2P differs from a traditional bank, where if you place a deposit, you have a claim on the bank (intermediated lending), but when you make a loan via a marketplace, your claim is on the underlying borrower (disintermediated lending). Where it gets a little murky is when these platforms start offering pooled loans/auto-invest functions, with provision funds to "protect your capital", etc... That is when the lines between P2P and traditional bank start to get blurred, and as ablender said, that's probably why the FCA felt like it had to step in late in 2016.
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nick
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Post by nick on Mar 5, 2017 16:44:20 GMT
If I have correctly understood, if the agent is paid by the borrower as agreed and the agent fails to pass the payment on, there is no legal way to enforce the correct behaviour by the agent If the agent has received funds on your behalf but has not passed these on to you for no good reason, then you can take legal action to enforce your rights to money taken by agents on your behalf. The obligations the platform has as acting as your agent/administrator of the loan will typically be governed by the T&Cs of the platform and implied terms under English law. Whilst the T&C's may not explicitly state that a platform will pass along all funds received by it as agent (typically net of platform fees), it is obviously an implied term. Assuming you have already raised a complaint with the platform and have not received a satisfactory response, you could raise the matter with the Financial Ombudsman Service which has jurisdiction in this area (assuming the platform is regulated under full or interim permission, see: www.handbook.fca.org.uk/handbook/DISP/2.pdf) - this is the cheapest and easiest way forward. Alternatively, the usual legal avenues of making a civil court claim is available to you, but will incur costs in the form of court fees and the cost of any legal representation you may seek - generally not worth it unless a material amount is in dispute.
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adrianc
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Post by adrianc on Mar 6, 2017 8:37:28 GMT
If I have correctly understood, if the agent is paid by the borrower as agreed and the agent fails to pass the payment on, there is no legal way to enforce the correct behaviour by the agent No. The agent would be failing in their duty to you, so you can take legal action on those grounds. But if the platform's failed to pass the money on, there's probably not going to be anything to take legal action against - and it'd become just one of the things for their continuity operator to sort out.
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Greenwood2
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Post by Greenwood2 on Mar 6, 2017 11:40:45 GMT
Thincats T&Cs extract
'We undertake to you that we or our appointed collection agent, which is currently Street UK,
shall:
6.2.1. receive repayments and/or payments from the Borrower in respect of capital and/or
interest in respect of a Loan;
6.2.2. make repayments and/or payments to you of capital and/or interest received on your
behalf in respect of a Loan from the Borrower.'
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Post by hnwlending on Mar 15, 2017 11:02:01 GMT
I think the relevant part of our T's and C's is this 4.6 As part of the HNW Lending Service, we shall: (a) carry out due diligence on all Borrowers requests for Loans prior to making them live on the HNW Lending Platform or accepting Security Agent Instructions; (b) provide full details of all Borrower requests for Loans made available for you to make Pledges against, including but not limited to, valuations, the Loan Agreement and the security documentation; (c) enter into Loan Agreements with Borrowers as agent on your behalf on the terms of the Lending Agency Agreement and Loan Agreement provided; (d) facilitate the payment and collection of sums due under or in connection with the Loan Agreements (including taking certain actions on behalf of Lenders upon a Borrower's default or if the Borrower becomes, or is likely to become, insolvent as set out in these terms and conditions); (e) if necessary, act as Security Agent in order to take security on the Borrower's assets and attend to the recovery of any debts owing/sell the Property and distribute the proceeds as set out in the Loan Agreement. However, due to SIPP regulations, this will not extend to becoming a mortgagee in possession (as may be allowed in the security documentation). In these cases, HNW Lending as agent will appoint an LPA receiver to become mortgagee in possession; (f) arrange for any capital and interest payments due under a Loan to be collected and paid to you when due; and (h) report to you in accordance with this Agreement. The whole T's and C's are here: hnwlending.co.uk/lender_termsBen Shaw HNW Lending Ltd ben@hnwlending.co.uk 07958 636 106 |
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