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Post by bikeman on Feb 23, 2018 16:33:16 GMT
The PF is pointless:
1. It's supposed to cover capital yet it wont payout until the capital is recovered. If it's covering my capital, why can't I have the capital, why do I have to wait for recovery?
2. It covers interest payments but only late payments where receipt is imminent. Once the borrower actually defaults (or AC arbitrarily suspends the loan) the PF doesn't pay. As loans are suspended as soon as a borrower late pays and in some cases well before they default, the PF is only ever expected to cover pennies.
3. The PF is discretionary. That means AC can choose if they even use it so the rules above are 'discretionary'. As they like to market that the PF has never had to payout, likelihood is they wont ever use it.
Assetz Capital attract lenders with the promise of the backup of a provision fund but make damm sure it will never have to payout.
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SteveT
Member of DD Central
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Post by SteveT on Feb 23, 2018 16:40:27 GMT
No, it’s intended to cover shortfalls in capital (for those lending via managed accounts), once all available recovery avenues are exhausted.
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Post by slumberingaccountant on Feb 23, 2018 16:51:03 GMT
Its working perfectly on QAA and 30daa. There's never a problem with withdrawals. so that suggest the provision fund (or some other half way house) is taking some losses. I cant quite work out this is done with Assetz saying the provision fund hasnt been used.
Having played around with Gbba etc i sold out pretty quickly as holdings were far to big. Even the new algorithms dont seem to reduce holdings to a sensible size. The MLIA is the only sensible option while using QAA and 30 day to hold money while i wait for loans to come through the pipeline. Fingers crosssed that none of the big loans held in 30 day and QAA go badly wrong.
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Post by bikeman on Feb 23, 2018 16:52:38 GMT
No, it’s intended to cover shortfalls in capital (for those lending via managed accounts), once all available recovery avenues are exhausted. A fit for purpose PF would cover capital and be replenished when recovery completes (like RS et al), thereby providing incentive to AC's recovery process. In it's current operation the PF is marketing smoke and mirrors
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Post by bikeman on Feb 23, 2018 16:54:11 GMT
Its working perfectly on QAA and 30daa. There's never a problem with withdrawals. so that suggest the provision fund (or some other half way house) is taking some losses. I cant quite work out this is done with Assetz saying the provision fund hasnt been used. Having played around with Gbba etc i sold out pretty quickly as holdings were far to big. Even the new algorithms dont seem to reduce holdings to a sensible size. The MLIA is the only sensible option while using QAA and 30 day to hold money while i wait for loans to come through the pipeline. Fingers crosssed that none of the big loans held in 30 day and QAA go badly wrong. And isn't that the crux of the problem, the PF seems to work differently for the QAA & 30D vs the GBBA & GEIA. Now where is that explained?
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Post by chris on Feb 23, 2018 17:00:54 GMT
Its working perfectly on QAA and 30daa. There's never a problem with withdrawals. so that suggest the provision fund (or some other half way house) is taking some losses. I cant quite work out this is done with Assetz saying the provision fund hasnt been used. Having played around with Gbba etc i sold out pretty quickly as holdings were far to big. Even the new algorithms dont seem to reduce holdings to a sensible size. The MLIA is the only sensible option while using QAA and 30 day to hold money while i wait for loans to come through the pipeline. Fingers crosssed that none of the big loans held in 30 day and QAA go badly wrong. And isn't that the crux of the problem, the PF seems to work differently for the QAA & 30D vs the GBBA & GEIA. Now where is that explained? They're separate provision funds and are operated differently. Yes this could be communicated better, but each account has its own provision fund.
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Post by chris on Feb 23, 2018 17:05:16 GMT
No, it’s intended to cover shortfalls in capital (for those lending via managed accounts), once all available recovery avenues are exhausted. A fit for purpose PF would cover capital and be replenished when recovery completes (like RS et al), thereby providing incentive to AC's recovery process. In it's current operation the PF is marketing smoke and mirrors I don't think the interest margin retained by the provision fund isn't enough to operate it in the same way as RS, and that has never been the intention. If you check RS's own stats it only has enough cash to cover half the current expected losses, the other half of their coverage ratio comes from expected future payments into the fund which may or may not actually happen. That fund is operated with more interest margin than our non-access accounts. Our accounts are also security backed where much of RS's lending, as I understand it, is unsecured.
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happy
Member of DD Central
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Post by happy on Feb 23, 2018 20:20:40 GMT
The PF is pointless: 1. It's supposed to cover capital yet it wont payout until the capital is recovered. If it's covering my capital, why can't I have the capital, why do I have to wait for recovery? 2. It covers interest payments but only late payments where receipt is imminent. Once the borrower actually defaults (or AC arbitrarily suspends the loan) the PF doesn't pay. As loans are suspended as soon as a borrower late pays and in some cases well before they default, the PF is only ever expected to cover pennies. 3. The PF is discretionary. That means AC can choose if they even use it so the rules above are 'discretionary'. As they like to market that the PF has never had to payout, likelihood is they wont ever use it. Assetz Capital attract lenders with the promise of the backup of a provision fund but make damm sure it will never have to payout. Firstly, Can I politely suggest you think carefully about changing the title of your thread as this looks suspiciously like trolling. EDIT: changed by mods. It has been explained time and again here to those that try and compare the PF of RS and (soon to be gone) Zopa with the likes of AC why they work differently. The AC PF protects you against any capital loss after secured assets are disposed of not against a default event which is what the RS PF protects you against. The protection against capital loss that AC asset secured loans together with a PF for the automated accounts provide is way beyond anything that the current RS PF provides with only barely enough cash and potential future contributions to cover todays expected debt. Any significant uptick on defaults will see the protection, and any confidence this PF provides to lenders disappear pretty quickly. I invest in both platforms but I understand the relative weakness that the RS PF offers. Just for the record RS have actually very recently changed the way their PF works regarding their larger property development loans meaning they do not get taken up by the PF but remain on the loan book so technically everyone who has a piece of that loan can only get out of it if someone else (unknowingly) buys them out. This includes new investors who will now actually (again unknowingly) buy parts of defaulted loans. So why did RS make this change? Answer, simply because their PF could not cope with even a small number of large loans defaulting and being repaid straight away as they do with other small loans. It would wipe the PF out in one go. So this is RS recognising that large asset backed loans are a problem for their existing PF model and personally I think their solution is a kludge and will probably be a short-term one if enough people realise they could be funding defaulted loans. Not sure what the FCA will make of it either. Edit: regarding your 3rd point, all P2P PFs are in fact discretionary otherwise it is considered an insurance against loss, that is an insurance product that is not able to be offered as part of the licence provided to P2P companies. Now if they all want to also take the time, resources and money to register as an insurance company and achieve regulatory approval for that then maybe they can remove the discretionary bit. It is the same as your pension trustees paying out a lump sum on your death, it is always discretionary otherwise it becomes, at least in part, a life assurance product which has different regulation, taxation rules etc. So in conclusion, please try to understand the differences we are dealing with here with the likes of AC, Lendy etc and accept that they will never work like RS.
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jlend
Member of DD Central
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Post by jlend on Feb 23, 2018 22:49:44 GMT
Firstly, Can I politely suggest you think carefully about changing the title of your thread as this looks suspiciously like trolling. It has been explained time and again here to those that try and compare the PF of RS and (soon to be gone) Zopa with the likes of AC why they work differently. The AC PF protects you against any capital loss after secured assets are disposed of not against a default event which is what the RS PF protects you against. The protection against capital loss that AC asset secured loans together with a PF for the automated accounts provide is way beyond anything that the current RS PF provides with only barely enough cash and potential future contributions to cover todays expected debt. Any significant uptick on defaults will see the protection, and any confidence this PF provides to lenders disappear pretty quickly. I invest in both platforms but I understand the relative weakness that the RS PF offers. Just for the record RS have actually very recently changed the way their PF works regarding their larger property development loans meaning they do not get taken up by the PF but remain on the loan book so technically everyone who has a piece of that loan can only get out of it if someone else (unknowingly) buys them out. This includes new investors who will now actually (again unknowingly) buy parts of defaulted loans. So why did RS make this change? Answer, simply because their PF could not cope with even a small number of large loans defaulting and being repaid straight away as they do with other small loans. It would wipe the PF out in one go. So this is RS recognising that large asset backed loans are a problem for their existing PF model and personally I think their solution is a kludge and will probably be a short-term one if enough people realise they could be funding defaulted loans. Not sure what the FCA will make of it either. Edit: regarding your 3rd point, all P2P PFs are in fact dicretionary otherwise it is considered an insurance against loss, that is an insurance product that is not able to be offered as part of the licence provided to P2P companies. Now if they all want to also take the time, resources and money to register as an insurance company and achieve regulatory approval for that then maybe they can remove the discretionary bit. It is the same as your pension trustees paying out a lump sum on your death, it is always discretionary otherwise it becomes, at least in part, a life assurance product which has different regulation, taxation rules etc. So in conclusion, please try to understand the differences we are dealing with here with the likes of AC, Lendy etc and accept that they will never work like RS. My thoughts for what it is worth on RS. I was one of the very early investors in RS from 2010 and have had a 6 figure sum invested with them both personally and for a period via a limited company. I went to their first RS lender drinks round a table in a pub in London. For me to date they have been fantastic and by far the easiest p2p company to deal with and returns and liquidity have met all my expectations every day for 8 years without exception. Of course past performance is no guarantee and they have had their issues. I appreciate lots of posters won't like them for lots of reasons. Other Platforms including AC have tried to follow in the footsteps of RS with their own take on a PF. Will I feel the same way about the AC PF and liquidity in a few years time? I will let you know.
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star dust
Member of DD Central
Posts: 2,998
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Post by star dust on Feb 24, 2018 9:08:27 GMT
Mod Hat On/ Great feeling of déjà vu here, I did something very similar on an Unbolted thread not long ago. I haven't been following the intricacies of the debate here, but it seems there may be misunderstanding's about the way things work. "Scam" implies fraud and dishonesty and I really don't think that applies in any way here, so leaving it out there in a thread title didn't seem appropriate. So as bikeman didn't seem to want to change the thread title I thought I'd do it for them. |
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sl75
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Post by sl75 on Mar 1, 2018 22:23:50 GMT
A fit for purpose PF would cover capital and be replenished when recovery completes (like RS et al), thereby providing incentive to AC's recovery process. In it's current operation the PF is marketing smoke and mirrors I don't think the interest margin retained by the provision fund isn't enough to operate it in the same way as RS, and that has never been the intention. If you check RS's own stats it only has enough cash to cover half the current expected losses, the other half of their coverage ratio comes from expected future payments into the fund which may or may not actually happen. That fund is operated with more interest margin than our non-access accounts. Our accounts are also security backed where much of RS's lending, as I understand it, is unsecured. First, I note that you misquoted the stats - they have enough cash to cover expected FUTURE losses (on the current loan book), which is a very different statistic to expected CURRENT losses... in principle, only the short-term expected losses actually require cash to cover them. A PF that pays out promptly at an early stage of the recovery process can and should expect plenty of future payments from recoveries, especially in cases of loans with security, where the PF can reasonably expect to at minimum recover the value of the security. It is also perfectly reasonable to balance the anticipated contributions to the PF in future months (a proportion of each interest payment actually made from the "good" loans) against the anticipated defaults in those same future months, as any early repayments that reduce those future contributions will also reduce the pool of loans that could potentially default. If instead all other avenues for recovery are exhausted before a single penny is paid out from a PF, then of course the PF cannot expect to receive any future payments - the "good" loans from the same period will have already repaid in full, and no further monies can reasonably be expected from the loans for which it has paid out. The ultimate position either way is that once all recoveries have been made, the PF ends up down by only the amount that couldn't be recovered... Of course, operating an "early payout" policy would require having enough cash in the PF to cover the largest loan defaulting without using up all the short-term reserves - somewhat harder to acheive when using very "chunky" loans that individually take up a significant percentage of the funds allocated to the PF-protected investment account.
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daveb4
Member of DD Central
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Post by daveb4 on Mar 2, 2018 6:54:15 GMT
I am sure if the 'majority' want a far more 'proactive paying' PF then Assetz could happily stop GBBA2 and set up GBBA3 at 3%. That is not a suggestion!
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Post by madmitch on Mar 2, 2018 15:32:42 GMT
Surely, the "...'majority'..." already have exactly what you are suggesting.
The differing rates on offer reflect whether you want your withdrawals immediately or in 30 days time!
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daveb4
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Posts: 220
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Post by daveb4 on Mar 2, 2018 21:17:03 GMT
Surely, the "...'majority'..." already have exactly what you are suggesting. The differing rates on offer reflect whether you want your withdrawals immediately or in 30 days time! Good point. Personaly I prefer MLA and GBBA while others prefer QAA and 30 day ac, that is why I like AC, as you can chose what mix you want.
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nyneil
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Post by nyneil on Mar 8, 2018 17:06:44 GMT
The PF is pointless: 1. It's supposed to cover capital yet it wont payout until the capital is recovered. If it's covering my capital, why can't I have the capital, why do I have to wait for recovery? 2. It covers interest payments but only late payments where receipt is imminent. Once the borrower actually defaults (or AC arbitrarily suspends the loan) the PF doesn't pay. As loans are suspended as soon as a borrower late pays and in some cases well before they default, the PF is only ever expected to cover pennies. 3. The PF is discretionary. That means AC can choose if they even use it so the rules above are 'discretionary'. As they like to market that the PF has never had to payout, likelihood is they wont ever use it. Assetz Capital attract lenders with the promise of the backup of a provision fund but make damm sure it will never have to payout. Firstly, Can I politely suggest you think carefully about changing the title of your thread as this looks suspiciously like trolling. EDIT: changed by mods. It has been explained time and again here to those that try and compare the PF of RS and (soon to be gone) Zopa with the likes of AC why they work differently. The AC PF protects you against any capital loss after secured assets are disposed of not against a default event which is what the RS PF protects you against. The protection against capital loss that AC asset secured loans together with a PF for the automated accounts provide is way beyond anything that the current RS PF provides with only barely enough cash and potential future contributions to cover todays expected debt. Any significant uptick on defaults will see the protection, and any confidence this PF provides to lenders disappear pretty quickly. I invest in both platforms but I understand the relative weakness that the RS PF offers. Just for the record RS have actually very recently changed the way their PF works regarding their larger property development loans meaning they do not get taken up by the PF but remain on the loan book so technically everyone who has a piece of that loan can only get out of it if someone else (unknowingly) buys them out. This includes new investors who will now actually (again unknowingly) buy parts of defaulted loans. So why did RS make this change? Answer, simply because their PF could not cope with even a small number of large loans defaulting and being repaid straight away as they do with other small loans. It would wipe the PF out in one go. So this is RS recognising that large asset backed loans are a problem for their existing PF model and personally I think their solution is a kludge and will probably be a short-term one if enough people realise they could be funding defaulted loans. Not sure what the FCA will make of it either. Edit: regarding your 3rd point, all P2P PFs are in fact discretionary otherwise it is considered an insurance against loss, that is an insurance product that is not able to be offered as part of the licence provided to P2P companies. Now if they all want to also take the time, resources and money to register as an insurance company and achieve regulatory approval for that then maybe they can remove the discretionary bit. It is the same as your pension trustees paying out a lump sum on your death, it is always discretionary otherwise it becomes, at least in part, a life assurance product which has different regulation, taxation rules etc. So in conclusion, please try to understand the differences we are dealing with here with the likes of AC, Lendy etc and accept that they will never work like RS. Thanks for adding clarity.
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