DBS

52 with the introduction of in car telematics and remote immobilisation we gain genuine security over the vehicles. Also with the wealth of data available such as driver ratings, mileage and revenues achieved we are able to underwrite with good precision across a diversified portfolio of drivers, cars and geographies. We are particularly proud to support the new introduction of wheelchair accessible vehicles into Uber’s UK fleet, helping customers, local authorities and NHS Trust Hospitals provide much better levels of service in appropriately adapted vehicles. THE FCA HAS BEEN LOOKING CLOSELY AT CROWDFUNDING, ALBEIT WITH MORE FOCUS ON P2P LENDING, BUT WHAT ARE YOUR THOUGHTS ON THE REGULATION OF DEBT BASED SECURITIES? Inevitably, as a sector grows, scrutiny from regulators grows. With debt based securities, you’re typically getting a set return from a borrower, but some platforms give little clarity about where the return is actually coming from. There is often a large spread between the gross borrower rate, compared to the rate that the bonds are paying out. Furthermore, this typically means you’re not lending to an underlying borrower, you’re lending to a lending business and that presents more complex risks. So, you’re not lending against a singular credit risk. You’re lending against multiple… the aggregation of hundreds or thousands of individual credits risks i.e. borrowers, plus a kind of operational risk. It’s akin to a retail packaged wholesale funding line for a finance institution. At times, there are some very light touch, unregulated activities going on behind the scenes and investors and advisers need to be careful they are aware of the risks. At Goji, as I’ve said, we have credit expertise in the business that takes a really close and scrupulous look at the underlying managers and can then turn around to investors and say, right, we are working with certain platforms because we understand how they derive value from their underlying borrowers. It is about sustainable, risk adjusted returns over the long term – we are relatively risk averse, and we need to develop a high level of confidence in the lending partner we’re working with. We need to worry about return of capital just as much as return on capital. Securities based platforms benefit from well- established, tried and tested regulatory frameworks, which is in stark contrast to the very new and evolving regulatory frameworks which apply to peer-to-peer activity. Certainly, securities based platforms in the form of a crowdfunding type model should be expected to remain on the regulator’s radar. It would be sensible to expect regulatory clampdowns and evolution of specific legislation with regards to debt based activity where access to the retail investor is involved. In our case, we do not offer direct access to retail investors and our business model therefore offers a considerably more robust partnership proposition to the intermediary and wealth manager market. By way of clarification it should be said upfront that Triple Point Advancr is not a P2P lender, i.e. a market place matching buyers and sellers. We are lenders, and as such, focus on our investors risk and return as our highest priority. That being said, the FCA has broadened its scope and is rightly focused on the whole sector. Triple Point welcomes sensible regulation which helps investors compare, evaluate and navigate away from inaccuracy or unreliable claims. Triple Point has been engaged in heavily regulated environments for over a decade and has the expertise in house to navigate in the most well advised manner. In fact, we have chosen with our new secured bond offering to provide an FCA approved prospectus even though it was not a requirement because we think it will give our investors additional comfort. The sector seems to be caught in a tug of war between the Government, which wants to encourage investment, and the FCA, which wants to stop investors trying new routes to returns for fear of losses. The FCA has made it very difficult to gain authorisation for the relevant activities, slowing down the growth of what should be a win-win market, better returns for investors and more capital for British business. It is frustrating that our level of regulation is so much higher than peer- to-peer loans, but then I would rather err on the side of investor protection. So, I wouldn’t drop the Investment crowdfunding standard, but instead apply the higher regulations to all forms of crowdfunding. Any responsible regulated business should surely know who their investors are before they decide whether to list an opportunity on the platform. I think it’s a strength of debt based securities that we have to have every single investor categorised as advised, sophisticated, high net worth or every day investors. It allows us to take our appropriateness assessment seriously and if something gets too complicated, or gets too risky, we can choose to only offer that to certain investors, such as those who are getting professional advice. I think the investment based crowdfunding regulations strike a good balance between customer “The FCA has made it very difficult to gain authorisation for the relevant activities, slowing down the growth of what should be a win-win market, better returns for investors and more capital for British business.” — Matt Taylor, Rockpool

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