zlb
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Post by zlb on Jun 3, 2019 9:12:16 GMT
Hi, as posted in fb group, www.telegraph.co.uk/investing/news/165m-lendy-collapses-experts-warn-dozen-peer-to-peer-firms-will/?You need a free registration to see the content. What do people think? Is this panic-mongering? Here is far less than <5% of the content, therefore it doesn't breach (c) Are there really 68 providers? "the Financial Conduct Authority (FCA), has estimated that 275,000 people have cash in peer-to-peer, investing more than £5bn across 68 providers."
I wonder which one's he's thinking of: "Roger Gewolb of FairMoney, a loan broker, and the Campaign for Fair Finance warned of further crashes. “I expect at least one large player to go and between six and a dozen or more smaller firms to close down,” he said."
"Neil Faulkner of the 4th Way, a P2P analyst, added: “I imagine there will be maybe one rocky collapse per year. On top of that, platforms that don’t make enough progress will simply stop approving new loans and wind down their existing loan books without any fuss."
The article references the wind down of BM. "Mario Lupori of RateSetter, another P2P firm, said the closure of platforms was inevitable, describing it as “Darwinism in action”.
He said: “Just like in any other industry, businesses that are not up to scratch – being badly run or having weak business models – simply cannot survive for long.”"
They report the three main issues as "widespread defaults and late payments" suggesting that this means that borrowers then can't find refinance. Once in administration, it's difficult to find buyers for incomplete developments (that's already been discussed in the Ly thread); and that the administration costs will take up money that would have gone to investors/lenders. They also say that "The FCA will release new guidelines for the industry this week."Neil Faulkener of 4thway is interviewed - he told them that if a platform is "sketchy or unclear" about their operations, then "avoid". So which ones have sketchy and unclear going on? |
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alanh
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Post by alanh on Jun 3, 2019 9:38:05 GMT
I think those of us who are active investors in many different platforms and participate/consult forums such as this are at the forefront of knowing whats going on in p2p. The newspapers are so far behind the curve on these things that its laughable really. These guys haven't been investing in p2p over many years and platforms as many of us have. The collective knowledge of investors on this platform is multiple times higher than any newspaper journalist and I base my investment decisions on what I am experiencing personally as opposed to the completely out of date stuff that appears in the papers.
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zlb
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Post by zlb on Jun 3, 2019 11:32:45 GMT
I suspect that the FCA new P2P regulations to be announced this week will be telling as to whether the press is wrong - it's my understanding that the FCA have moved toward this owing to correspondence with P2P investors who have been acting long- or short-term but aren't liking what is going on now. I'm also thinking about what's happening with LC&F www.fscs.org.uk/failed-firms/lcf/The P2P platform was authorised by FCA but the investments themselves were not. |
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registerme
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Post by registerme on Jun 3, 2019 11:38:23 GMT
I suspect that the FCA new P2P regulations to be announced this week will be telling as to whether the press is wrong - it's my understanding that the FCA have moved toward this owing to correspondence with P2P investors who have been acting long- or short-term but aren't liking what is going on now. I'm also thinking about what's happening with LC&F www.fscs.org.uk/failed-firms/lcf/The P2P platform was authorised by FCA but the investments themselves were not. I could be wrong but I don't think LCF was operating as a P2P company.
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Post by charlata on Jun 3, 2019 14:50:56 GMT
The P2P industry is a farce in its present state.
I sincerely hope the FCA have got their act together on the subject. It was ludicrous to allow P2P such a light-handed arms-length hardly-any-regulation-whatsoever environment. P2P is seriously crying out for significant regulation.
We already have a more regulated industry for loans (banks & building societies) I can't see why we'd want a duplicate. Collateral was lack of regulation not lack of regulations. Lendy's plight is due to having offered a lot of loans that were worth more than the security. I would argue that intermediaries like Lendy shouldn't be allowed to take all their fees up front, as this leads to a misalignment of interests between lenders and platforms.
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Vero
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Post by Vero on Jun 4, 2019 11:27:41 GMT
Lendy collapse draws comparison with the current, FCA regulated, Neil Woodford fund situation.
Lendy had a track record with boat loans, then moved into property, where they lent lenders' funds on risky, overvalued (often undeveloped) properties.
Iliquid, much value lost, lenders unable to withdraw funds.
Woodford had a track record with Invesco, then moved to his own fund, where he spent investors' funds on risky, overvalued (often unquoted) companies.
Iliquid, much value lost, investors unable to withdraw funds.
I'm not sure I'd immediately think to blame lack of FCA regulation in these cases, rather than lack of risk management, oversight, bad management - generally, bad investments.
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zlb
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Post by zlb on Jun 4, 2019 15:33:05 GMT
Lendy collapse draws comparison with the current, FCA regulated, Neil Woodford fund situation.
Lendy had a track record with boat loans, then moved into property, where they lent lenders' funds on risky, overvalued (often undeveloped) properties.
Iliquid, much value lost, lenders unable to withdraw funds.
Woodford had a track record with Invesco, then moved to his own fund, where he spent investors' funds on risky, overvalued (often unquoted) companies.
Iliquid, much value lost, investors unable to withdraw funds.
I'm not sure I'd immediately think to blame lack of FCA regulation in these cases, rather than lack of risk management, oversight, bad management - generally, bad investments.
but rhetorically, at which point does this tip over into 'shouldn't have been in charge in the first place'? And is there compensation or claw-back for that?
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zccax77
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Post by zccax77 on Jun 5, 2019 0:26:39 GMT
Woodford 3 year total return -7%, Lendy 3 year total return -10% to -90%. Wish I picked Woodford.
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ashtondav
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Post by ashtondav on Jun 5, 2019 5:46:23 GMT
From today’s Times:
“GLI Finance, an Aim-listed group that has stakes in several peer-to-peer platforms, warned last month that one of its investments was facing “significant financial difficulties” and that it needed an immediate capital injection to continue trading.”
Well who could that be, boys and girls....
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Post by stevefindlay on Jun 5, 2019 6:55:44 GMT
Just one amusing observation on the Telegraph article:
Ratesetter CIO & Darwinism: erm, not sure if Darwin's natural selection theory would predict that someone with a career in marketing should become a Chief Investment Officer. Perhaps this is one of the weaknesses in the market you are trying to identify?! (Emporers new clothes may be a better analogy).
But well done Mario nonetheless. I hope for your lenders' sakes that you've learnt quickly, and a lot, over the last two years you've been in the role.
#bargepole
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Greenwood2
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Post by Greenwood2 on Jun 5, 2019 7:07:08 GMT
Just one amusing observation on the Telegraph article: Ratesetter CIO & Darwinism: erm, not sure if Darwin's natural selection theory would predict that someone with a career in marketing should become a Chief Investment Officer. Perhaps this is one of the weaknesses in the market you are trying to identify?! (Emporers new clothes may be a better analogy). But well done Mario nonetheless. I hope for your lenders' sakes that you've learnt quickly, and a lot, over the last two years you've been in the role. #bargepole That seems a bit harsh, when it's BondMason that's actually in wind-down.
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scc
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Post by scc on Jun 5, 2019 7:17:16 GMT
I think those of us who are active investors in many different platforms and participate/consult forums such as this are at the forefront of knowing whats going on in p2p. The newspapers are so far behind the curve on these things that its laughable really. These guys haven't been investing in p2p over many years and platforms as many of us have. The collective knowledge of investors on this platform is multiple times higher than any newspaper journalist and I base my investment decisions on what I am experiencing personally as opposed to the completely out of date stuff that appears in the papers. One advantage journalists is that they can place a bunch of calls in an afternoon and expect to be able to speak to company representatives, pundits etc and so get a reasonably up-to-date picture of what's going on. They may also be less subject to confirmation bias. Our view of the industry may be more detailed, but could be lagging in some respects.
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alibaba
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Post by alibaba on Jun 5, 2019 7:30:07 GMT
I think those of us who are active investors in many different platforms and participate/consult forums such as this are at the forefront of knowing whats going on in p2p. The newspapers are so far behind the curve on these things that its laughable really. These guys haven't been investing in p2p over many years and platforms as many of us have. The collective knowledge of investors on this platform is multiple times higher than any newspaper journalist and I base my investment decisions on what I am experiencing personally as opposed to the completely out of date stuff that appears in the papers. One advantage journalists is that they can place a bunch of calls in an afternoon and expect to be able to speak to company representatives, pundits etc and so get a reasonably up-to-date picture of what's going on. They may also be less subject to confirmation bias. Our view of the industry may be more detailed, but could be lagging in some respects.
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Greenwood2
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Post by Greenwood2 on Jun 5, 2019 7:34:16 GMT
I think those of us who are active investors in many different platforms and participate/consult forums such as this are at the forefront of knowing whats going on in p2p. The newspapers are so far behind the curve on these things that its laughable really. These guys haven't been investing in p2p over many years and platforms as many of us have. The collective knowledge of investors on this platform is multiple times higher than any newspaper journalist and I base my investment decisions on what I am experiencing personally as opposed to the completely out of date stuff that appears in the papers. One advantage journalists is that they can place a bunch of calls in an afternoon and expect to be able to speak to company representatives, pundits etc and so get a reasonably up-to-date picture of what's going on. They may also be less subject to confirmation bias. Our view of the industry may be more detailed, but could be lagging in some respects. We certainly see it from a very specific point of view as lenders. I did see in the (non-lenders presumably) comments on the article things like, what did you expect if you go for 12% returns, it's obviously too good to be true, etc. There didn't seem to be a great deal of sympathy out there.
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Post by stevefindlay on Jun 5, 2019 8:02:42 GMT
Just one amusing observation on the Telegraph article: Ratesetter CIO & Darwinism: erm, not sure if Darwin's natural selection theory would predict that someone with a career in marketing should become a Chief Investment Officer. Perhaps this is one of the weaknesses in the market you are trying to identify?! (Emporers new clothes may be a better analogy). But well done Mario nonetheless. I hope for your lenders' sakes that you've learnt quickly, and a lot, over the last two years you've been in the role. #bargepole That seems a bit harsh, when it's BondMason that's actually in wind-down. Yes, the BondMason Core service is winding down to protect clients returns and captial, because we didn't feel an increase in fees, which would have made our Core proposition sustainable, was in the best interests of clients. Ratesetters higher fee model per loan should make them more profitable. A stronger business model for them, but is that in the best interests of their lender clients? One of the problems in the sector is that some platforms have the mindset of marketing agencies, not investment houses. I trust the latter with my funds, not the former. Mario offered his opinion; I thought I'd mine.
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