Peer-to-peer lending sites: MSE guide discussion

fun4everyone wrote: »

Which is all I said it was. You are just guessing about FSCS protection costs, Masonic has provided some breakdown for you. We can all agree p2p would be better with FSCS protection. It wouldn't mean as much as you think it would.

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?

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.

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 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 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.