At the request of the Autorité des marchés financiers (AMF), the Bureau de décision et de révision en valeurs mobilières (BDRVM) issued an order on February 27, 2008 against IOU Central Inc. ("IOU") to cease any activity, directly, indirectly or by Internet, in respect of a transaction in a form of investment governed by the Securities Act (the "Act"), including any activity as a securities dealer. The BDRVM also ordered Philippe Marleau and all directors, officers, employees, representatives and mandataries of IOU to cease any activity in respect of a transaction in securities in a form of investment governed by the Act for and on behalf of IOU, including any activity as a securities dealer.
For the protection of investors, the AMF stressed that it was imperative that the BDRVM issue this decision without a prior hearing since IOU continued to operate its website.
The Autorité des marchés financiers (AMF) is the regulatory and oversight body for Québec’s financial sector.
After being offline for several hours, Canadian IOUCentral.ca is now online again, but with limited functionality. That means that currently no loan listing and bidding is possible.
From the website:
Why Is IOU Central Operating With Limited Functionalities?
IOU Central is now operating with limited functionality while we resolve a regulatory matter. IOU Central is acting in a very new area. We are the first in Canada, although similar models are operating under similar regulatory environments in the US and the UK. We are modeled on those innovative enterprises. We are committed to working with all the relevant regulatory bodies in order for us to continue to offer this service to borrowers and lenders. We will take all measures necessary to ensure we are working in full compliance with all regulations.
When Will IOU Central Be Fully Operational?
We will notify all our users by email when the site is fully operational. If you are not already a user, you may register with us and we will notify you by email when the site is fully operational.
IOU Central launched first in Canada. As I already mentioned in my first post on IOU Central they profited from the knowledge input the two founders of danish Fairrates.dk brought with them. Fairrates had problems with fraud cases due to incomplete access to credit histories.
Here are some interesting notes by Bartlomiej Owczarek from Virtuous Cycle taken at a conference in Poland where Fairrates founder Arkadiusz Hajduk, now product manager at IOU Central, gave a presentation:
- The startup was initially located in Denmark
- Two guys on a sofa
- I liked the quote – “expert is a person who committed all possible mistakes in a narrow field of specialty”
- Idea was inspired by Prosper
- They didn’t bother with business plans and presentations (note: maybe not so good in the end, given later credit history problem, see below)
- Nevertheless, they got angel from early on – entrepreneur, house builder
- Features of their angel – did call from time to time, but otherwise didn’t require much reporting, in retrospect now they would prefer someone more of a “mentor” type
- They coded for 4 months without office
- Then they got office, at respectable location (good for customer trust)
- They coded another 6 months when they had office
- First version was seen and tested by some 30 people
- Operating model assumed that they don’t make credit decision or take on risk – all this is on the lender
- Highlight of the “growth” period – 90 minutes on the front page of a major business portal
- After launch, lenders turned out not a huge problem; in a first week, one person offered equivalent of ca. PLN 50k
- However, huge problem with (good) borrowers
- Also, in Denmark there is no access to credit history (only yes/no credit problems query possible)
- Side note: banks in Denmark do not care to advertise to people more than 25 years old, because no one ever changes the bank
- They had two evident fraud cases
- In the end, business model didn’t fly because of borrower problem (people took wait-and-see approach), resulting in the “decline” phase
- Luckily, they were approached by people from Canada, who had non-technical capabilities in the area but needed technology platform, and they sold out
- Angel apparently got 150% of his initial contribution
- Lessons learned: don’t hesitate to kill your own ideas
(via Prosper Lending Review)
IOU central launched the first active p2p lending service in Canada today. Borrowers can request loans from 1,000 to 25,000 CAN$ and select a term between 1 and 36 months. IOU central allows the borrower to specify a minimum amount at which he will accept the loan, should it not fully fund in the 2 weeks listing duration. IOU Central pulls the TransRisk credit score of the borrower, provided by Transunion Canada. According to the press release, lenders can expect to earn interest rates between 5 and 25 percent.
Borrowers pay a closing fee ranging from 1 to 3 percent depending on their credit score. Lenders pay an annual servicing fee of 0.5 percent of the open principal balance. Only Canadian residents can borrow or lend. The borrower needs to have a Trans union credit score.
Borrowers may have several loans, but the total outstanding principal may not exceed 25,000 CAN$.
Lenders earn interest on deposited money (bank prime rate minus 2.5%). Individuals may lend up to 5 million CAN$. Corporations may lend up to 50 million CAN$. Minimum bid amount is 25 CAN$.
Studying the team of IOU Central I noticed Robert Bialek (VP Technology) and Arkadiusz Hajduk (Product Manager), which were the founders of FairRates.dk, a p2p lending service in Denmark, which now is part of IOU Central. An assumption would be that IOU Central acquired (or merged with) the company, to gain the knowledge and experience made.
To discuss IOU central, the lending or borrowing experience or to ask questions on the service you can use Wiseclerk's IOU Central forums.