Linked Finance - Peer to Peer Lending

Hello,

While I appreciate the point that you are making, the Central Bank, the ECB and the Irish Government (through the Dept of Finance etc), all engage regularly.

If they had a desire to do something, it could have been done a long time ago.

This will be regulated eventually at EU level, and Irish legislation and supervisors will be implementing EU requirements, with some flexibility.

There is no point in Irish legislators acting too early, as they will inevitably have to adjust in due course. John Gormley tried to ban incandescent lightbulbs in 2008 in Ireland six months before they were going to be basically banned EU-wide, at which point Ireland would have to get in line. He eventually dropped the plan.

Back on topic, EU Commission said it was going to have a proposal for a Regulation for crowdfunding in October 2018 but nothing much since, I am not sure why.
 
Hello,

While not wanting to be rude, I am not going to accept that, sorry.

Linked Finance launched in early 2013. They later obtained UK Regulatory approval in early 2017, with lots of publicity about the fact that there was no option to get regulated by the Irish Central Bank.

Other crowd funding operations launched around the same time, or not long after Linked Finance.

It's now April 2020, seven years since Linked Finance launched and there is still no regulation for crowdfunding, here in Ireland. That's simply inexcusable and the Central Bank should not be let off the hook, for failing to regulate companies who are promoting "investments" to Irish consumers.

The UK Regulator managed to figure out how to put some regulations in place quite quickly, so in the absence of asking our lads to do some work, could they not even have managed a bit of the old "copy and paste"? The UK and Ireland does share the same language, so surely it wasn't that big a job for the lads at the CBI?

Once again, the Central Bank is failing to provide appropriate regulation and long term, its the members of the public who will pay the price for this.

So, what will happen then, no doubt the CBI will attempt to make excuses and try to deflect, while an ex senior CBI staff member goes around telling everyone how he / she had warned against this blah blah blah. Who knows that might even write a little book on it :(
 
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It's now April 2020, seven years since Linked Finance launched and there is still no regulation for crowdfunding, here in Ireland. That's simply inexcusable and the Central Bank should not be let off the hook, for failing to regulate companies who are promoting "investments" to Irish consumers.

Hi Mr Earl

And should the Central Bank take responsibility for the poor behaviour of the companies which sold overseas property in Ireland?

And should they take responsibility for the losses I have made betting with Paddy Power?

If you think that the Central Bank should regulate these, then lobby the politicians.

The Central Bank can't choose what it wants to regulate. The politicians you elected make those choices.

Brendan
 
Hi Mr Earl

And should the Central Bank take responsibility for the poor behaviour of the companies which sold overseas property in Ireland?

And should they take responsibility for the losses I have made betting with Paddy Power?

If you think that the Central Bank should regulate these, then lobby the politicians.

The Central Bank can't choose what it wants to regulate. The politicians you elected make those choices.

Brendan

Hello,

In short Mr Burgess, the regulator should be regulating the sale of anything that falls under the category of financial services being offered to Irish consumers, in my view.

Does that include the sale of foreign sale and leasebacks, maybe?

Does that include regulating gambling, absolutely not. That's not to say that halving shouldn't be regulated, or that Paddy Power might not need to be approved for provision of payment services or its debit card, perhaps.

As for contracting the CBI and our politicans, I have done and more than once, dating back a number of years. Unfortunitely, they just brushed me off with a little lip service, and a few carefully worded excuses.
 
In short Mr Burgess, the regulator should be regulating the sale of anything that falls under the category of financial services being offered to Irish consumers, in my view.

What you think that the Central Bank should be doing and what they are permitted and obliged to do by law are two different things.

We can argue whether or not peer to peer lending should be regulated.

But you should not criticise the Central Bank for failing to do a job which they have no authority to do.

Brendan
 
What you think that the Central Bank should be doing and what they are permitted and obliged to do by law are two different things.

We can argue whether or not peer to peer lending should be regulated.

But you should not criticise the Central Bank for failing to do a job which they have no authority to do.

Brendan

Oh come on Mr Burgess, please don't tell me that you think it's that clear cut, that the CBI doesn't have any obligation to be pro-active, to be watching for potential risks to consumers and pushing for whatever relevant instruction is needed from the Dept of Finance etc.

When we entrust regulation on a third party, we expect them to be pro-active, not just give us a verse of monkey say, monkey do, don't we? I know I certainly do.
 
I expect the Central Bank to act within their powers and not outside their powers.

However, if they see some shadow banking that they are concerned about, I would expect them to raise these issues with the Department of Finance, but that is all that they can do.

Brendan
 
@MrEarl

You don't understand how this works:

  1. Government proposes legislation;
  2. Oireachtas votes on it;
  3. Central Bank implements it.

In the absence of the first two steps the Central Bank can do very little.
 
Mr Earl

if you are not happy with Linked Finance not being regulated, why do you lend through it?

And Brendan and Coyote are correct re regulated. The CBI has very little power in this country. It is up to the politicians to write the legislation.

Steven
www.bluewaterfp.ie
 
New fees on your cash balance from 1st January

Fees to apply to available cash balances from 1 January 2021
I need to inform you today about a change which will affect you as an investor from January 1st 2021. As you are no doubt aware, deposit interest rates across the Eurozone are at a historic low, which has led to the Banks imposing negative interest rates and charging their business account holders to hold cash on deposit. Over the last year, Linked Finance has absorbed these charges without passing these fees onto investors. Sadly however, the banks have increased these charges steadily in the last few months, and it has come to a point that we can no longer absorb these fees.

It is therefore with reluctance that from 1st January 2021, we will be levying a new Balance Fee on available cash deposits on the platform.

What will change

From 1st January 2021, any investor who:

a) has not invested in any loans in the past 3 months, or
b) has an available cash balance in excess of €5,000 on the Linked Finance platform (regardless of bidding activity levels),

will be charged a monthly fee, equivalent to 1.25% per annum, of your available cash balance on the Linked Finance platform. Eligibility for the fee will be assessed on the 1st of each month, after which the fee will be calculated daily and then deducted from your account on the last calendar day of each month.

Any cash you have invested in a live loan will not accrue these charges.

You will be able to monitor this Balance Fee charge by looking at the Available Cash panel in your Linked Finance account.

Next steps

To avoid this charge, or significantly reduce the charge deducted, you should:

  • Reduce the amount of cash deposits you have on the platform by making a withdrawal. You may make withdrawals free of charge until 31 December 2020. After that date, you can make 1 free withdrawal over €250 per month.
  • Actively monitor the amount of available cash you have on the platform on a regular basis to ensure you don't keep more money on the platform than you need to.
  • Review your autobid strategy to make sure that you don't miss out in opportunities to bid on new loans on the platform.
Hmmm, what's this? 1 free withdrawal over €250 per month. What about less than that? Doesn't mention it in the email. Had a look in the FAQs.

You can make one free withdrawal of over €250 per month. Withdrawals under €250 will be charged at €5 per withdrawal. A minimum limit of €50 will be enforced for all withdrawals unless your total balance is less than €50.

Tha's a big change change to ther terms.

I logged on recently and had €25 in my cash balance. Current rule is that you can't withdraw less than €50. Also you can't top up by less than €50 so I topped up by €50 and then withdrew €75 immediately.

I'm still owed €99. If any payments start up again (unlikely) they'll charge me a fee on the cash balance and now have restricted free withdrawals to over €250. If I do start receiving payments I'll top up by €250 and withdraw it plus any payments.

I can see them going to the wall in all honestly.
 
I found them poor from the beginning. I was an early lender, relatively small amounts, never had any problems with the businesses or any repayments. Found it very difficult to deal with the peer lending company itself - they changed the rules a couple of times without any notice and I had to jump through hoops to withdraw money, e.g. I had to make a request by email between X date and Y date, no more than once a quarter, the amount had to be a minimum of Z and if it was below that I had to give them more notice, etc. Inexplicably convoluted and seemed like they were very disorganised. They also made me feel at every turn that I was a bother to them and being awkward for wanting to withdraw my own cash under the T&Cs that I had signed up for.
 
Did I read recently that Viking Splash Tours going under is a big issue for Linked Finance?

Sad news, and probably a big shock for anyone who has gone into this stuff as an alternative to cash deposits as it’s sometimes marketed (which is scandalous).
 
Hello Gordon,

Yes, you did read about Viking Splash Tours (Duk Tours). I think there was a Creditors meeting scheduled for yesterday and assume that a Liquidator was appointed.

It's actually a sad loss, as I thought it was a great service, that entertained both tourists and locals alike - combining fun and a little education about Dublin City.

I believe that there were P2P loans there for an original amount of €300k, not sure how much that balance might have reduced, if at all.

While the debt to Viking Splash Tours is significant, it would obviously be underwritten by numerous lenders ("investors"), so in isolation, hopefully this won't be too significant a loss for any one party.

I assume that the Linked Finance debt was backed by way of Personal Guarantee(s), as that's there standard model, as I have it - but odds are that the PG is not backed with any collateral, so who knows what the recovery might ever be - or how long one may have to wait, to see any money recovered.

What I would really like to know from LinkedIn now, is what the split is across their loan book, under different industry sectors - as I've a feeling that they have significant exposure to the tourism, travel and hospitality sectors (all of which have been hit very badly, by the economic impact of Covid - 19).

Niall Dorrian and his Linked Finance business are really going to be under the spotlight now, in terms of how they manage the existing problem loans, and seek to advance new loans.
 
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Did I read recently that Viking Splash Tours going under is a big issue for Linked Finance?

Sad news, and probably a big shock for anyone who has gone into this stuff as an alternative to cash deposits as it’s sometimes marketed (which is scandalous).
It was a typical hysterical indo article. "hundreds of peer to peer lenders on the hook if viking splash go down"

They then quote the big €300,000 number but handily don't work it out as less than €600 average nor mention when the loan started.

I do a small amount of lending on linked finance and haven't had any bad debts yet and getting about 8% return.

I'm not one of the viking investors, but if I had a €500 hit I'd accept it as part of the risk.
 
It's actually a sad loss, as I thought it was a great service, that entertained both tourists and locals alike - combining fun and a little education about Dublin City.

I expect to see the people behind this return with a similar service in the future. I read recently they were working on a new craft design with the company who modified the current DUKWs, and have separated that development from the Viking Splash entity being liquidated.
 
I believe that there were P2P loans there for an original amount of €300k, not sure how much that balance might have reduced, if at all.
Linked Finance had reduced their exposure to €77,384 by the time the company went into liquidation.

The Company's statement of affairs showed inter-company debtors with a book value of €3.7 million but a Nil realisable value. Based on the SOA, there will be no dividend to creditors.

As Leo suggested above, the new design and manufacturing was set up in a separate company in the UK.

Jim Stafford
 
I've just received the final payment on loans through LinkedFinance. Over the past three years I lent €5,500 and received (following charges) €555 in interest. Considering it was during a pandemic, I think it was a very healthy return. However, I am very tempted to leave it at that. Should I?
 
Very similar experience to yours .......lent 5k over 3 years ,multiple loans. Netted 1100 or so, in interest after charges. 1 unrecoverable bad debt ....approx 120 euro.
 
I've just received the final payment on loans through LinkedFinance. Over the past three years I lent €5,500 and received (following charges) €555 in interest. Considering it was during a pandemic, I think it was a very healthy return. However, I am very tempted to leave it at that. Should I?
Without knowing the exact timings, it’s impossible to run the numbers, but that sounds like a terrible return to me.

€185 per year on €5,500, so 3.3%, or 1.65% after tax.

And you’re lending money to companies who’ve been turned down by the pillar banks?
 
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