ashtondav
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Post by ashtondav on Sept 3, 2019 14:33:03 GMT
No it says for access, plus, max 1 and 5 year accounts you can change from reinvesting to holding account.https://www.ratesetter.com/siteassets/media/legal/nov-sept-2019/03102019-additional-terms.pdf
anyway you can still cancel unmatched orders and withdraw so you set the rate at going rate plus 5%, so if 5 year rate is 5% set it to 10%, and either get a very good rate or get your hands on your repayments
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Greenwood2
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Post by Greenwood2 on Sept 3, 2019 14:33:31 GMT
New t&c say clearly that for all products you can turn off reinvestment and redirect to holding account. That makes sense, so there is no need to sell to release funds. So how does that square with (from the FAQ): "The repayments that you receive from borrowers will be automatically reinvested so you will need to release your investment in order to withdraw. There is no option to take repayments directly to your Holding account. This makes liquidity consistent for all investors." There is also a comment in the T&Cs that if you cancel your lend order you can remove unmatched funds. How that will work in practise I don't know. Edit: Section 8. 8.2 in T&Cs.
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Post by 999william on Sept 3, 2019 14:39:19 GMT
Just had this (very quick - well done Ratesetter) response to my query about existing investments and retaining the option of automatic withdrawal of monthly repayments and interest...
Thank you for your email.
Your current investment will continue in the 5 year market at your current reinvestment settings, as will your withdrawals.
"The automatic reinvestment only relates to the new products that are being launched which compliment the current 1 & 5 year markets. Therefore your investment will continue as normal unless you decide to invest money into the the new products or change your reinvestment settings to invest into these products."
Hope that helps to clear up that issue 😀
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robski
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Post by robski on Sept 3, 2019 14:39:20 GMT
Reading again and thinking I think if you set your rate to going + 5% then its basically never going to get lent. as the terminology RS use the fee is to release your investment then I cannot see how cancelling an offer could be deemed releasing an investment.
So I see it as, if you want to do a partial withdrawl of your holding your likely to get the 14 day rule (assuming they apply the same penalty to the new market) so it means in effect your losing upto 14 days worth of interest as your orders are not going to get matched for the next 14 days.
If your happy to close down RS as your repayments come in then I think in theory you do the 5% thing and keep cancelling your orders, you don't care about the block as your closing down.
If they were to attempt to charge fees for money not lent then I think a FCA complaint would be the natural response. I cannot see how they could justify a charge for something thats not actually invested. In theory this money MUST be in a client account and as such its outside their actual invested funds.
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cb25
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Post by cb25 on Sept 3, 2019 14:40:57 GMT
New t&c say clearly that for all products you can turn off reinvestment and redirect to holding account. That makes sense, so there is no need to sell to release funds. So how does that square with (from the FAQ): "The repayments that you receive from borrowers will be automatically reinvested so you will need to release your investment in order to withdraw. There is no option to take repayments directly to your Holding account. This makes liquidity consistent for all investors." As the bulk of my RS money is in the 5-year market with repayments to my Holding account, I've emailed RS asking for clarification as there's no way I want my 5-year money rolling over at some rate RS choose or have to pay to withdraw that money.
Edit: quick response by RS to my email
me: When it says “There is no option to take repayments directly to your Holding account”, is this referring ONLY to the new Access, Plus and Max accounts…..OR…will it also include my existing 1-year and 5-year accounts which currently repay to my Holding account?
RS:You are correct that the current 1 & 5 year markets will remain the same and the update will only affect the new products.
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r00lish67
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Post by r00lish67 on Sept 3, 2019 14:42:16 GMT
No it says for access, plus, max 1 and 5 year accounts you can change from reinvesting to holding account.https://www.ratesetter.com/siteassets/media/legal/nov-sept-2019/03102019-additional-terms.pdf anyway you can still cancel unmatched orders and withdraw so you set the rate at going rate plus 5%, so if 5 year rate is 5% set it to 10%, and either get a very good rate or get your hands on your repayments As I read it, that doc only applies to the existing 1yr/5yr markets. If you mean section 3.3, that only refers to the option to move to holding for 1yr/5yrs (but you can reinvest into the new products).
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sydb
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Post by sydb on Sept 3, 2019 14:53:07 GMT
I think some people are getting very confused here. What I see happening is very simple. The 1yr and 5yr investments will stay the same for existing investors in these products but it's pretty obvious that RS are trying to wind these down so they may make it harder or impossible for us to reinvest in them as time goes on.
With rolling, no longer will you be able to set your reinvestment rate. This 'product' will become 0/30day/90day notice accounts with 3 different variable rates set by RS.
What did I miss?
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ceejay
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Post by ceejay on Sept 3, 2019 15:01:25 GMT
I think some people are getting very confused here. What I see happening is very simple. The 1yr and 5yr investments will stay the same but it's pretty obvious that RS are trying to wind these down so they will make it harder or impossible for us to reinvest in them as time goes on.
With rolling, no longer will you be able to set your reinvestment rate. This 'product' will become 0/30day/90day notice accounts with 3 different variable rates set by RS.
What did I miss?
Well, for one, the new account doesn't feature 30 or 90 day notice... you can have your money more or less immediately, liquidity permitting, but you WILL pay an exit penalty fee, which you can't avoid by waiting till the end of the contract (as you can with the current 1 yr market) because your repayments will always be reinvested. I think. Sure, your current 1yr/5yr loans are unaffected but it seems pretty clear that these markets will be obsolescent PDQ.
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Greenwood2
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Post by Greenwood2 on Sept 3, 2019 15:03:27 GMT
I think some people are getting very confused here. What I see happening is very simple. The 1yr and 5yr investments will stay the same for existing investors in these products but it's pretty obvious that RS are trying to wind these down so they may make it harder or impossible for us to reinvest in them as time goes on.
With rolling, no longer will you be able to set your reinvestment rate. This 'product' will become 0/30day/90day notice accounts with 3 different variable rates set by RS.
What did I miss?
Not quite notice accounts payment of 30 day/90 day interest on withdrawal. Variable rates set by RS, but you will be able to set your own rates above or below. Difficulty of withdrawing fee free, will cancelling a lending order allow withdrawal of returning (currently unmatched funds) or will you always have to pay the (30/90 day) fee? Exactly how cancelling a lending order will work. Edit: Crossed with above.
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sydb
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Post by sydb on Sept 3, 2019 15:12:32 GMT
Thanks for the correction. Not so simple.
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Post by propman on Sept 3, 2019 15:23:16 GMT
As I read it, we will no longer have individual loans for the new products. So I don't think there will be any repayments to go on at the reinvestment settings. One of the advantages quoted was that you will no longer be exposed to early repayments! the only alternative approach would be if repayments were based on the whole portfolio of loans that these 3 products combined are invested in. Also, if the going rate is adjusted, it is unclear whether that would apply to all existing funds as well as any new funds. I can see that some people might find it easier to understand a single investment rate and single balance in one or more of the instant, 30 day or 90 day penalty accounts. But if own rates are selected, will this just effect an average rate in each product? I can see why they have done everything to discourage own rates!
While a bit underhand (as notice accounts give the option of access after the specified time at no loss of interest), this is comparable with their initial penalty rules of recharacterising as other markets. On these rates, essentially Plus is relevant for investments expected to exceed 4 months and Max expected to exceed 11 months.
The big issue to me is how do they determine what funds are taken from each product? If this was purely based on rates, this massive drop in MR relative to 1yr & 5 yr markets, will effectively stop reinvestment at current rates thereby forcing the movement of reinvested money into these markets or arrangements no more beneficial! (Similar to when Zopa introduced Safeguard when fewer and fewer loans were provided to the Pre-SG market).
I am assuming that they would only look at the differential to the Going Rate as they will prefer to have the comfort of some funds locked in to penalties if they are withdrawn and therefore less likely to be withdrawn. I would expect 1 year to be treated as Plus and 5 year as Max. So the 5.9% loans matchable this weekend on 5 year would be +0.9% and the 4.7% matchable yesterday on 1 year +0.7%. These amounts above MR have been rarely achieved since the longer averaging was introduced!
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Post by Deleted on Sept 3, 2019 16:11:48 GMT
Lots and lots of missing key details. Significant issues concerning the provision fund -which can be eroded very rapidly if there is a sudden exit from the new products, leaving customers who have invested in 5 year loans potentially “in the lurch” for provision fund support on loans that may take nearly five years to pay back. Effectively, as investors for many years we are now potentially giving away the provision fund which we have accrued over many years to future “fly by night” investors.
Or is Ratesetter going to drawn a line under the exiting provision fund and only use a new one to protect the new products? money which might only ever be committed for as little as a matter of days and can be pretty much instantly withdrawn?
Ratesetter talks about liquidity, but is it actually their liquidity we should be now concerned about?
Clearly they want more regular income than their “cut” of the difference between what they loan money for ultimately and what you set your lending rate as.
Perhaps somebody is getting greedy here. Was it us, or is it them?
Is their business model under severe stress? How safe are our investments?
No problem. Business as normal. That’s why we are changing things so rapidly, with little explanation and giving you little time to react. But you can always take your money out but we are going to charge you for doing so. better get used to hearing that.
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Post by propman on Sept 3, 2019 16:26:12 GMT
Lots and lots of missing key details. Significant issues concerning the provision fund -which can be eroded very rapidly if there is a sudden exit from the new products, leaving customers who have invested in 5 year loans potentially “in the lurch” for provision fund support on loans that may take nearly five years to pay back. Effectively, as investors for many years we are now potentially giving away the provision fund which we have accrued over many years to future “fly by night” investors. Or is Ratesetter going to drawn a line under the exiting provision fund and only use a new one to protect the new products? money which might only ever be committed for as little as a matter of days and can be pretty much instantly withdrawn? Ratesetter talks about liquidity, but is it actually their liquidity we should be now concerned about? Clearly they want more regular income than their “cut” of the difference between what they loan money for ultimately and what you set your lending rate as. Perhaps somebody is getting greedy here. Was it us, or is it them? Is their business model under severe stress? How safe are our investments? No problem. Business as normal. That’s why we are changing things so rapidly, with little explanation and giving you little time to react. But you can always take your money out but we are going to charge you for doing so. better get used to hearing that. They have said before that provision fund will only be used to pay defaults. If they have no funds available to buy out investors waiting to withdraw then they have to wait until the loans repay or more offers are made.
I agree that this is identifying the risk that they have been taking for some time now in covering the difference in rates between existing and those offered. Also they have been offering loans at a known rate before offers are made to lend, taking profits when "Lend it now" fills the gap and losses when they have been caught short and had to go to higher rates offered on the market. Although there is no certainty for cashing out, under most continuing circumstances someone will come up with the funds, they will just make RS pay! So RS is almost as exposed as a traditional bank borrowing short to loan long.
Is it a coincidence taht this is coming in a few weeks before Brexit? I was astounded that they have allowed rolling to build up for a few weeks now. Yes they had insufficient liquidity in rolling and it cost them with rates up to 9.9%, but it looks like they have stopped or at least significantly curtailed subsidising the 5 year market with rolling funds. I'm sure that is why lending has slowed so dramatically prior to the weekend payment runs. presumably this is to kickstart the new products.
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ashtondav
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Post by ashtondav on Sept 3, 2019 16:26:14 GMT
If RS wanted to retire the 1 and 5 year accounts why not just announce it now. Why state you can continue to invest in these legacy products?
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Post by propman on Sept 3, 2019 16:29:36 GMT
If RS wanted to retire the 1 and 5 year accounts why not just announce it now. Why state you can continue to invest in these legacy products? They are probably being cautious in case the new products are unpopular. There is no downside for them except the complexity of the allocation algorithm.
It will be interesting how they market this without suggesting that it is like a notice account (with penalty).
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