Peer-to-peer lending sites: MSE guide discussion

masonic

fun4everyone wrote: »

Hmmm does not add up for me. I had uninvested cash on the site (a small amount but enough to have it noted) and I have not been emailed anything.

By way of update, someone contacted BDO. Apparently letters have only been emailed to about 30 investors where the discrepancy is greatest between what was on their proof of debt form and what was calculated from the reconstructed platform records.

jamesd

masonic wrote: »

In another twist to the Collateral story, several investors have reported getting an email outlining their positions according to the reconstructed platform data. These appear to have been sent only to a limited number of people (I haven't received one), and the inaccuracies are in part from the administrators treating loan parts that were listed for sale as being sold and not counted towards the total balance.

I received one, as one of the biggest investors with biggest discrepancies. The value on the proof of debt form was correct, about £32,000. The value calculated from recovered data is about £1,000 because I had about £31,000 for sale that I expected to need for other investing connected with the new tax year - VCT, pension & ISA. Aside from disregarding the for sale parts their numbers exactly match mine: the missing for sale is the exact amount that I had for sale.

There are three relevant columns in their spreadsheet:

amount_invested: appears to be amount originally invested
amount_live: same numeric values as amount_invested
amount_selling: appears to really be total sold and not for sale, amount-already-sold would be a closer name

amount_invested - amount_selling = the amount I had that I hadn't offered for sale, the about £1,000 number.

It appears that they will probably correct their calculations. At a guess, loan parts for sale were recorded in a different database table that they haven't yet included in their calculations.

From other people, it seems that missing is:

1. amount for sale
2. cash balance
3. amount deposited but not invested

If contacted, be sure you reply. If not contacted you might want to wait since it seems that this exercise has identified some areas where more work is needed. Not really surprising that at least one more iteration is needed.

jamesd

sendu wrote: »

How would you come up with your final relative risk assessment of them both?

FC far less risky than WiseAlpha, which can't possibly be FCA regulated because the relevant firm is a limited liability British Virgin Islands firm, while FC can be.

BVI WiseAlpha Ltd buys corporate bonds. It sells you BVI WiseAlpha notes, as an unsecured creditor. That company has other creditors besides you possibly including borrowing for its own purposes secured with the corporate bonds it owns, with you a lower ranking creditor. Any insolvency involving your investments would be in the BVI.

The relevant risk disclosures are:

"You are not participating directly in the senior secured loans or bonds issued by companies

WiseAlpha Limited Participation Notes, or “Notes”, issued by WiseAlpha Limited

WiseAlpha Limited is a body corporate registered in the BVI. WiseAlpha Limited as a body corporate may have other creditors or employ the use of various forms of financing during the course of its operation. In the event that the company suffers an insolvency event investors may be exposed to a risk on the recovery of their Notes.

The WiseAlpha Limited Notes are not guaranteed or insured and investors may receive back less than the amount invested and there is a risk of losing your investment in its entirety."

And FAQ:

"WiseAlpha Technologies Limited is responsible for:

promoting the WiseAlpha platform
arranging transactions in the Notes
transmitting member orders to WiseAlpha Limited
general management and upgrading of the platform technology
providing customer service to members who invest on the WiseAlpha platform but not advice
WiseAlpha Technologies Limited (FRN: 751087) is authorised and regulated by the Financial Conduct Authority in the UK

WiseAlpha Limited is a separate legal entity to WiseAlpha Technologies Limited and is domiciled in the British Virgin Islands. The company's registered address is C/O Intertrust Corporate Services (BVI) Limited, Nemours Chambers, Road Town, Tortola, British Virgin Islands, VG1110 (Company No.1838703)

This company acts as the counterparty to members when they subscribe for and invest in WiseAlpha Notes"

You deal with the UK platform which claims to be FCA regulated but it is not clear to me that the registration is for these investments.

Since you appear to hold BVI notes, ensure that you properly report to HMRC, not as UK. Note that even a penny of foreign interest requires you to register for self-assessment and complete a tax return every year. Severe penalties for failure to disclose foreign things, like four times the amount, were recently introduced.

sendu

jamesd wrote: »

FC far less risky than WiseAlpha, which can't possibly be FCA regulated because the relevant firm is a limited liability British Virgin Islands firm, while FC can be.[...].

Thanks, very informative. Have you looked at the equivalent details behind FC? I looked at the various legal stuff I could find on their website and it seemed OK to me, but I may be missing some subtlety.

BrokeyMcBrokeface

Thankyou! How do they verify your identity? And is it therefore the case that no research is carried out into the source of funds invested?

fun4everyone

BrokeyMcBrokeface wrote: »

Thankyou! How do they verify your identity? And is it therefore the case that no research is carried out into the source of funds invested?

ID verification can be carried out both electronically and through the old fashioned method of asking to see your passport/driving licence (or a scan of it). Ratesetter verified me electronically and most people might not realise that process even happens, but it is something they must do.

You seem to want to know a lot about newer anti money laundering laws (that have mostly arisen in the last few years from the EU). Source of funds check requirements can be interpreted in many different ways by platforms and regulators. I have never been asked by Ratesetter for proof of source of funds but I have never sent more than token amounts there. I have absolutely no doubt should I want to fund my account to the tune of £1,000,000 then I would be required to provide source of funds proof. Platforms will not tell you what will trigger such an intrusive request otherwise the real money launderers would know how to avoid them.

Fatbritabroad

Ft story on lendy being put into special measures. Thoughts on impact to the wider p2p market? From what I've seen this isn't a surprise to seasoned investors in this area

fun4everyone

Fatbritabroad wrote: »

Ft story on lendy being put into special measures. Thoughts on impact to the wider p2p market? From what I've seen this isn't a surprise to seasoned investors in this area

Completely unsurprised. If putting thousands in Collateral was my worst p2p judgement then completely avoiding SavingStream/Lendy was my best.

They should not have got interim authorisation in the first place, they used to make utterly ridiculous claims on their front page implying you would be guaranteed 1% per month interest on money you put on there.

I don't think it will have a hugely negative affect on p2p in the long run. Everyone still views this as a new wild west type of investment and we all diversify among many platforms.

I am interested in to what the FCA actually do here now though it has to said.

Fatbritabroad

fun4everyone wrote: »

Completely unsurprised. If putting thousands in Collateral was my worst p2p judgement then completely avoiding SavingStream/Lendy was my best.

They should not have got interim authorisation in the first place, they used to make utterly ridiculous claims on their front page implying you would be guaranteed 1% per month interest on money you put on there.

I don't think it will have a hugely negative affect on p2p in the long run. Everyone still views this as a new wild west type of investment and we all diversify among many platforms.

I am interested in to what the FCA actually do here now though it has to said.

Yes same. As I work in a regulated industry my
View of the fca is somewhat tarnished.. Let's hope they prove me wrong!

fun4everyone

Fatbritabroad wrote: »

my View of the fca is somewhat tarnished..

They are just a bunch of retired civil servants and juiced in jobs for the boys types who want to do as little as possible for as much money as possible.