Peer-to-peer lending sites: MSE guide discussion

masonic

itwasntme001 wrote: »

So not much added value by Masonic.

I'm sorry you feel that way, but it was you who made assertions about how large the levy would be in comparison to other sectors. Perhaps you ought not to have relied on me to provide the figures.

Highly illiquid loans are very different to liquid stocks. It takes time to manage a loan book - this costs administrators money. The administrators may potentially have to get that money from loans being repaid. Do FSCS provide protection to lenders against this?

No, not in relation to asset realisations from secured lending. That's part of investment risk. It happens within the wrapper of each loan.

masonic

itwasntme001 wrote: »

Sure but you gave a hypothetical case of firms having FSCS protection. So we need to assume collateral had FSCS protection.

Ok, I'll accept that.

They haven't been returned to the investors yet. How much will this be after the administrators take their cut? Do FSCS protect against this as well?

See the previous post. However, it would have covered the attempted theft of money from the clients account by one of the directors, if that money hadn't been recovered.

fun4everyone

itwasntme001 wrote: »

all i said is that there will be fees for FSCS protection which would be substantially higher then FCA fees. Masonic provided more details on this but nowhere did he mention how much or how they calculate the fees. So not much added value by Masonic.



Agree that banks and investment brokers/funds etc are treated differently in terms of amount covered and how the fees are calculated. Also agree that P2P is more like investment brokers. And yes also agree that it probably wont mean much (but then how do you know how many frauds/bankruptcies will occur in P2P over time) to an investor except a bit of confidence to get them to invest in P2P. The question really is how are the fees priced, could the FSCS scheme be undercharging for taking on a lot of unforeseen risks?


Highly illiquid loans are very different to liquid stocks. It takes time to manage a loan book - this costs administrators money. The administrators may potentially have to get that money from loans being repaid. Do FSCS provide protection to lenders against this?

no...........

itwasntme001

masonic wrote: »

I'm sorry you feel that way, but it was you who made assertions about how large the levy would be in comparison to other sectors. Perhaps you ought not to have relied on me to provide the figures.


No, not in relation to asset realisations from secured lending. That's part of investment risk. It happens within the quantum of each loan.

So if the FSCS is only covering for fraud essentially, if you pick a random P2P platform and a random investment broker/pension provider, which do you think will have more fraud risk?

masonic

itwasntme001 wrote: »

So if the FSCS is only covering for fraud essentially, if you pick a random P2P platform and a random investment broker/pension provider, which do you think will have more fraud risk?

I think someone has come to the internet in a bad mood and is looking to pick a fight.

I'd say about equal likelihood, since there have been one or two isolated instances in each sector in recent years.

itwasntme001

masonic wrote: »

I think someone has come to the internet in a bad mood and is looking to pick a fight.

I'd say about equal likelihood, since there have been a few instances in each sector.

Not picking a fight. Just creating a debate in which i am learning from.


So you are basing it on history? When there has not been much of a history with P2P and a lot with the investment/pension fund/broker sector?

masonic

itwasntme001 wrote: »

So you are basing it on history? When there has not been much of a history with P2P and a lot with the investment/pension fund/broker sector?

I was careful to state within recent years, such that there was a level playing field. Both sectors are far less likely to call on FSCS money than the delinquent credit union sector - it seems those fail with alarming regularity.

masonic

masonic wrote: »

itwasntme001 wrote: »

Sure but you gave a hypothetical case of firms having FSCS protection. So we need to assume collateral had FSCS protection.

Ok, I'll accept that.

Although it isn't material to the hypothetical discussion above, I should clarify that the investments made through Collateral were probably not P2P. Most likely the investments will be considered to be in an unregulated collective investment scheme. As such all losses are capital losses that cannot be offset against P2P interest, but can be offset against capital gains. And if P2P was covered by the FSCS, Collateral would still have been exempt. Just in case anyone was under any misapprehension.

shoi

masonic wrote: »

Firstly, Collateral was not authorised, it was trading fraudulently. .....

They have said that they had expensive legal advice that the authorisation was sufficient

shoi

masonic wrote: »

.... I should clarify that the investments made through Collateral were probably not P2P. Most likely the investments will be considered to be in an unregulated collective investment scheme. ...

I must have blinked. What tells you that?