toffeeboy
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Post by toffeeboy on May 5, 2016 9:38:41 GMT
I don't see why RS need to change anything. There is the option to set your own rates so you don't have to get caught out when the lending rate goes low like it did at the start of the week, the majority of people that got caught with the 4.7% rate have auto lend at the lending rate turned on so they have agreed to take whatever rate is going at the time the money comes into their account. If they could be bothered to put a bit more time and effort in they could have got a higher rate but they couldn't so they take what they are given.
How many people on this forum leant at 4.7%? I would be surprised if there is a single one so why is everyone complaining the system doesn't work? These lenders would have come in below us whether it was at 4.7% or 5.7% so what is the problem?
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alender
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Post by alender on May 5, 2016 9:47:11 GMT
I don't see why RS need to change anything. There is the option to set your own rates so you don't have to get caught out when the lending rate goes low like it did at the start of the week, the majority of people that got caught with the 4.7% rate have auto lend at the lending rate turned on so they have agreed to take whatever rate is going at the time the money comes into their account. If they could be bothered to put a bit more time and effort in they could have got a higher rate but they couldn't so they take what they are given.
How many people on this forum leant at 4.7%? I would be surprised if there is a single one so why is everyone complaining the system doesn't work? These lenders would have come in below us whether it was at 4.7% or 5.7% so what is the problem? The problem is not that you can’t set your own rate it is way RS runs the markets and the effect this has on the rates on offer, IMHO if this was a true market the rates would be higher.
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Post by GSV3MIaC on May 5, 2016 10:38:45 GMT
How many people on this forum leant at 4.7%? I would be surprised if there is a single one so why is everyone complaining the system doesn't work? These lenders would have come in below us whether it was at 4.7% or 5.7% so what is the problem? /mod hat off The problem is that some of us are not just concerned about ourselves (the 'I'm all right Jack' brand of capitalism) we'd like the grannies and numpties to get a fairer crack too. Yes, maybe there should be a small penalty for not bothering to put the time or effort in, and not everyone wants or needs the last 0.1% .. but being penalised by a quarter seems a bit steep to me (and if they fell for the 'lend it right now' rate, they'd have been even further in the hole .. for =x years=, remember, not for 10 minutes until they wised up). This is typical banking behaviour .. pay as little as you can get away with (0.1% on last year's high rate ISA, once the guarantee runs out) while advertising this years super deal for new customers (only) .. and I, for one, am not impressed by that sort of thing.
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Post by propman on May 5, 2016 11:24:29 GMT
I don't see why RS need to change anything. There is the option to set your own rates so you don't have to get caught out when the lending rate goes low like it did at the start of the week, the majority of people that got caught with the 4.7% rate have auto lend at the lending rate turned on so they have agreed to take whatever rate is going at the time the money comes into their account. If they could be bothered to put a bit more time and effort in they could have got a higher rate but they couldn't so they take what they are given.
How many people on this forum leant at 4.7%? I would be surprised if there is a single one so why is everyone complaining the system doesn't work? These lenders would have come in below us whether it was at 4.7% or 5.7% so what is the problem? So basically you (and most forum members) are all right Jack! I agree that the sheep being lead astray drives more loan requests that ultimately allow us to skim the good rates. the only issue is whether the reputation risk of another media story about RS fleecing normal "savers" would have significant platform damage.
Re a "Market" it has long become obvious that the "markets" that have been run appear poorly linked to the real world with rates set against the market norm. Either rates are consistently too high (as RS believe as IIRC they think 5% is around the long term expected rate in 5 yrs) and so rates are held artificially high by limited lenders prepared to pursue their loans at a "reasonable price" (ie many scared off by any risk, not helped by IFAs rating P2P with grey market investments! As well as people who might not fully appreciate risk just looking at the headline rate and therefore choosing much higher risk alternatives with limited appreciation of the tail risks involved), or there are a significant body of investors who underprice the risk and so are inadvisably prepared to go much lower than they should, but are taking what is on offer (this justifies the "lend it now" at least when not operating as in extreme situations).
Circuit breakers will still allow the market to die if there is a significant excess of lending funds on any market. This could be seen as a short term market correction to much lower rates, but I don't think that the market has the liquidity to deal with this in weeks. Most normal markets have sophisticated participants with the potential liquidity to quickly meet liquidity shortfalls at an informed price. I fear that this is not the case for the larger P2Ps. Come the ISA availability and this will be put to the test.
- PM
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Post by Deleted on May 5, 2016 11:28:36 GMT
Agree GSV3MIaC, if a newbie/pensioner was unlucky enough to lend out funds for three years at close to 2% and then watch the rate rise to 5% within days, I think they would be feeling hard done by.
Also if this person then decides to take this further to the FSA, I don't think their grievances will just be dismissed out of hand.
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toffeeboy
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Post by toffeeboy on May 5, 2016 11:44:30 GMT
How many people on this forum leant at 4.7%? I would be surprised if there is a single one so why is everyone complaining the system doesn't work? These lenders would have come in below us whether it was at 4.7% or 5.7% so what is the problem? /mod hat off The problem is that some of us are not just concerned about ourselves (the 'I'm all right Jack' brand of capitalism) we'd like the grannies and numpties to get a fairer crack too. Yes, maybe there should be a small penalty for not bothering to put the time or effort in, and not everyone wants or needs the last 0.1% .. but being penalised by a quarter seems a bit steep to me (and if they fell for the 'lend it right now' rate, they'd have been even further in the hole .. for =x years=, remember, not for 10 minutes until they wised up). This is typical banking behaviour .. pay as little as you can get away with (0.1% on last year's high rate ISA, once the guarantee runs out) while advertising this years super deal for new customers (only) .. and I, for one, am not impressed by that sort of thing. As far as I can see it was done fairly, the people who turn on auto lend at lend rate agree to lend at the current rate. Some generous soul decided to lend at 4.7% therefore making this the lend rate as it was the lowest on offer and therefore everyone that used auto lend leant their money out at the same rate. If someone had put £1,000,000 at 4.7% would there have been a problem.
This is a market place and you can go to a market and pay whatever the going rate is or you can haggle. Those that choose not to haggle are just accepting the rate without question. The main thing is that people are shouting for RS to set upper and lower limits but I remember when Zopa put limits in and they got lambasted for it.
Call me a capitalist or whatever you like but these people agree to sit at the front of the queue and not do anything extra to earn higher rates so if they lose out on 1.2% then that is the choice that they made. Comparing it to banking behaviour is not on either as it wasn't RS that lowered the rate.
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toffeeboy
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Post by toffeeboy on May 5, 2016 11:50:02 GMT
Agree GSV3MIaC, if a newbie/pensioner was unlucky enough to lend out funds for three years at close to 2%, then watch the rate rise to 5% within days, I think they would be feeling hard done by. Also if this person then decides to take this further to the FSA, I don't think their grievances will just be dismissed out of hand. I would hope that they would then take it upon themselves to learn why this happened and therefore become a more intelligent lender.
I disagree, I don't believe that the FSA would have any problem as RS have provided them with exactly the service they signed up for and they were not responsible for the drop in rate, they just allowed it to happen which is letting the market do what it wants.
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alender
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Post by alender on May 5, 2016 12:05:36 GMT
As far as I can see it was done fairly, the people who turn on auto lend at lend rate agree to lend at the current rate. Some generous soul decided to lend at 4.7% therefore making this the lend rate as it was the lowest on offer and therefore everyone that used auto lend leant their money out at the same rate. If someone had put £1,000,000 at 4.7% would there have been a problem.
Call me a capitalist or whatever you like but these people agree to sit at the front of the queue and not do anything extra to earn higher rates so if they lose out on 1.2% then that is the choice that they made. Comparing it to banking behaviour is not on either as it wasn't RS that lowered the rate.
It is the way RS run the so called market that caused the rates to be lowered not sure I would say this is fare, the person who placed £1740 at 0.9% on the 1 year market could/is down 3.3% on the last matched rate or to put it another way would have got 4.5 times as much in interest if this had not have appended. Capitalism believes in free markets this is not a free market as RS sees all the cards sets the borrower's rates, places the borrowers offers on market when it chooses as well as other things designed to bring down the rate.
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Post by GSV3MIaC on May 5, 2016 12:11:19 GMT
Actually I (also) don't think the FSA would be all that bothered - they are not noted for being awfully proactive (or even reactive). Further I doubt grannies (et al) would actually NOTICE that they had got a bad deal ... if they actually looked at rates, they wouldn't be in that position.
My granny (RIP) was daft enough to think these institutions might have her best interests in mind, and be taking good care of her, so she's have been unlikely to check the details. So yeah, nobody squeals, it's all perfectly legal, folks got what they thought they wanted .. we'll have to agree to disagree as to whether that is 'right' ('fair', 'ethical' 'moral' .. pick your own fuzzy term). Long time readers will know I had the same issue with FC, and other bidding platforms, where the uninitiated lent money at 4% on loans the wise were getting 14.9% on. (Fixed rate sorted that, but it shouldn't be the platform fixing the rate IMO).
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locutus
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Post by locutus on May 5, 2016 13:00:26 GMT
<snip> This is a market place...
I suggest you read a bit more about how RS works. Only in the very loosest sense could it be classed as a marketplace. On one side, you have thousands of lenders (sellers) and on the other, you have RS as a sole borrower (buyer). Lenders and RS obviously don't compete on equal terms or have access to the same information and as a result you get the type of distortion you're witnessing. A true and fair market would allow lenders to be matched with borrowers directly, with RS only facilitating. That is not the case and as a result, claims of market manipulation will probably plague the platform for the forseeable. In fact, RS's shareholders expect the company to borrow from us as cheaply as possible whilst lending to borrowers at rates that are as high as possible but still commercially viable. It is not a conspiracy theory to suggest that they are attempting to do this by whatever legitimate means they can. Whether we would consider them legitimate is a different conversation. Lending monthly money for up to 5 years and using provision fund money to fund the very loans that you are supposed to be insuring against is certainly pushing the boundaries. Result is more market distortion.
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Post by mellbreak on May 5, 2016 15:51:58 GMT
I don't know why RS cannot bring back the system they had a year or so ago when we could set our lending offers to whichever is the higher of "our rate" or "market rate". This would avoid the need to keep adjusting offer rates, while having a safety floor below which offers would not be made. Money that we have on the market would have to be checked daily and the rate adjusted if necessary, but that should just be "a simple matter of programming".
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locutus
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Post by locutus on May 5, 2016 15:58:59 GMT
I don't know why RS cannot bring back the system they had a year or so ago when we could set our lending offers to whichever is the higher of "our rate" or "market rate". This would avoid the need to keep adjusting offer rates, while having a safety floor below which offers would not be made. Money that we have on the market would have to be checked daily and the rate adjusted if necessary, but that should just be "a simple matter of programming". Why would they do a silly thing like that and raise their cost of funds? It is not in the interest of their shareholders to needlessly raise their core financing costs. Once you understand this simple fact, then all the little "tweaks" they have made start to make sense. As Kev likes to say, if you don't like it, go elsewhere. I have and suggest others follow suit.
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dovap
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Post by dovap on May 5, 2016 16:06:39 GMT
Rolling 2.6% atm - doesn't seem all that long ago that stability had been restored and all was right with the world. Used to be handy for parking money - ah well.
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Post by westonkevRS on May 5, 2016 16:54:22 GMT
Quite a discussion.
Of course the market isn't perfect. It has thin days and a lop-sided market with 1000s lenders on one side and borrowers who come from such a variety of channels and price points it's impossible to have a 1-2-1 type model like equity LSE trading or ForEx. But RateSetter tries to create a fair as possible market, without interference or manipulation.
For all its faults I think it a better model than a Credit Committee style "here are the rates, take it or leave it" model". That's what has allowed banks to screw savers and our most comparable platform offering lower lender rates and relying on brand trust and lender inertia. For its faults, I'm sure most would agree RateSetter has the best available platform model today.
However the "circuit breaker" is a good idea, and one already in place with the largest equity exchanges. Albeit I wouldn't want a "breaker", more like a cap on the maximum shift upwards or downwards between each days Market Rate. Probably 10% movement cap seems reasonable. I will propose this, although please accept no promise of approvial or timescales.
Kevin.
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Post by GSV3MIaC on May 5, 2016 17:51:47 GMT
That's good, but what can we/you do about the even more volatile and fictitious 'lend it now' rate(s)?
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