toffeeboy
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Post by toffeeboy on Mar 30, 2016 11:20:45 GMT
Point taken pip, westonkevRS can RS offer a bit more information than just an additional loan was made. What percentage of the PF is actually a loan from RS rather than PF money?
Also what is the plan for retrieving the loans?
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Post by westonkevRS on Mar 30, 2016 17:01:39 GMT
If you "hover" over the Provision Fund number it outlines the loan made by RMM Ltd, which is currently £500k.
There is no policy on when this loan would be repaid, but there are certainly no short term plans to remove the funds.
Kevin.
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jimc99
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Post by jimc99 on Mar 31, 2016 4:37:16 GMT
As you say you aren't happy with the coverage so you are pulling out and that is your prerogative and I have no problem with that. It was Jim coming on saying the PF needs increasing that got my back up, just because he isn't happy he thinks things should change and damn all of those that are happy with how things are run.
I think I am entitled to air my views and sure many lenders agree with my concerns. If you do not then that's fine but no need to object in quite the way you have.. What I don't think you get is that a low coverage ratio means RS can offer cheaper loans. More loans means more fees and income for them which is fine for RS owners. However investors are paying for these benefits by having less safeguards and lower interest rates. Anyway, as said earlier, I will simply reduce my investments and hope that other members will not. That plus the new ISA money soon to arrive will hopefully give me time to exit without loss.
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spiral
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Post by spiral on Mar 31, 2016 7:22:56 GMT
If you "hover" over the Provision Fund number it outlines the loan made by RMM Ltd, which is currently £500k. There is no policy on when this loan would be repaid, but there are certainly no short term plans to remove the funds. Kevin. westonkevRS the second part of the question related to how would this loan be treated if RS went into liquidation. Is the loan structured in such a way that it is an asset that would be called in by the creditors? If it is, then is it right that this amount is used in the overall figure as at the time it is most likely to be needed, it wouldn't be available.
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toffeeboy
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Post by toffeeboy on Mar 31, 2016 12:08:50 GMT
I think I am entitled to air my views and sure many lenders agree with my concerns. If you do not then that's fine but no need to object in quite the way you have.. What I don't think you get is that a low coverage ratio means RS can offer cheaper loans. More loans means more fees and income for them which is fine for RS owners. However investors are paying for these benefits by having less safeguards and lower interest rates. Anyway, as said earlier, I will simply reduce my investments and hope that other members will not. That plus the new ISA money soon to arrive will hopefully give me time to exit without loss. You are allowed to air your views as I am allowed to disagree with them, as I said if you don't like the security offered then don't lend is your option. I don't see the need to come on saying that RS needs to raise their rates because you don't agree with them, if enough people agree with you then they will leave causing RS to rethink their coverage but for the moment you are in the minority.
RS can only offer rates based on the rates lenders are prepared to accept, if everyone thought that the coverage offered warranted higher rates then they would increase their rates and the rates offered by RS would have to increase. As it is I am happy with the rates I receive for the coverage that is offered so continue to lend through them.
I seriously doubt that there is any danger of you exiting with a loss seeing as the PF is running at an excess and has covered all defaults so far.
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Post by westonkevRS on Mar 31, 2016 19:52:06 GMT
If you "hover" over the Provision Fund number it outlines the loan made by RMM Ltd, which is currently £500k. There is no policy on when this loan would be repaid, but there are certainly no short term plans to remove the funds. Kevin. westonkevRS the second part of the question related to how would this loan be treated if RS went into liquidation. Is the loan structured in such a way that it is an asset that would be called in by the creditors? If it is, then is it right that this amount is used in the overall figure as at the time it is most likely to be needed, it wouldn't be available. I can't honestly answer. I suppose legally you are correct, the loan could be called in by the creditors of RMM Ltd. If a resolution event was called due to a shortage of PF, then the loan could be available. If the issue was one of platform failure, then legally the loan could be recalled and used to pay RMM Ltd creditors and wages before lenders. Of course this is all hypothetical. Kevin.
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investibod
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Post by investibod on Mar 31, 2016 21:43:45 GMT
westonkevRS the second part of the question related to how would this loan be treated if RS went into liquidation. Is the loan structured in such a way that it is an asset that would be called in by the creditors? If it is, then is it right that this amount is used in the overall figure as at the time it is most likely to be needed, it wouldn't be available. I can't honestly answer. I suppose legally you are correct, the loan could be called in by the creditors of RMM Ltd. If a resolution event was called due to a shortage of PF, then the loan could be available. If the issue was one of platform failure, then legally the loan could be recalled and used to pay RMM Ltd creditors and wages before lenders. Of course this is all hypothetical. Kevin. We would like to hope that all discussion about the PF is hypothetical However, if this amount could not be guaranteed to be available if needed, then I think that there is a strong argument for not counting this towards the coverage percent.
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registerme
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Post by registerme on Mar 31, 2016 22:40:40 GMT
Agreed, I don't see it as being fundamentally different to the "PF investing in RS loans" discussion. For people to have confidence in provision funds (those of any platform, not just RS), the more they are separate and distinct from the parent platform the better.
Platform in trouble, creditors call in loans, one of those loans being to the PF, PF being undermined as a result.... it's not an impossible scenario is it?
Compare and contrast a company's pension fund being topped up by the company. Once that money is in the pension fund it no longer belongs to the company in any way shape or form*.
* as long as your name isn't Maxwell.
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jlend
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Post by jlend on Apr 3, 2016 7:50:54 GMT
westonkevRS the second part of the question related to how would this loan be treated if RS went into liquidation. Is the loan structured in such a way that it is an asset that would be called in by the creditors? If it is, then is it right that this amount is used in the overall figure as at the time it is most likely to be needed, it wouldn't be available. I can't honestly answer. I suppose legally you are correct, the loan could be called in by the creditors of RMM Ltd. If a resolution event was called due to a shortage of PF, then the loan could be available. If the issue was one of platform failure, then legally the loan could be recalled and used to pay RMM Ltd creditors and wages before lenders. Of course this is all hypothetical. Kevin. I seem to remember that RMM Ltd were charging interest on the loan to the provision fund. Is this correct?
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jlend
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Post by jlend on Apr 3, 2016 8:26:10 GMT
Agreed, I don't see it as being fundamentally different to the "PF investing in RS loans" discussion. For people to have confidence in provision funds (those of any platform, not just RS), the more they are separate and distinct from the parent platform the better. Platform in trouble, creditors call in loans, one of those loans being to the PF, PF being undermined as a result.... it's not an impossible scenario is it? Compare and contrast a company's pension fund being topped up by the company. Once that money is in the pension fund it no longer belongs to the company in any way shape or form*.
* as long as your name isn't Maxwell. Although I agree with Westonkev that there is no sign the platform is in trouble and it is in great shape I think you are right from the limited amount of detail we have. I am not sure of the value of the provision fund loan to lenders depending on how the loan is structured based on my experience. The level of seniority of lenders vs RMM Ltd if the provision fund got into trouble if the loan was called in for example might make a difference in some circumstances. E.g. the fund could refuse to repay the loan to RMM. Administration and loan terms is a complicated area of which I have some but limited experience. Others i am sure are more knowledgeable than me. All hypothetical of course as there are no problems at the moment and I continue to invest a large amount in ratesether.
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alender
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Post by alender on Apr 3, 2016 10:57:14 GMT
The provision fund like most things in RS is lot more complicated than it looks on the surface. There seems to be a set of guide lines but no firm legal rules around the fund. It should be legally ring fenced from RS with only money in the fund that cannot be called on to do anything else but handle defaults. Investments from the fund should be only in a safe instruments and accounts and never in P2P. If this is not the case the coverage ratios etc mean very little, I am sure it will function well in a benign market but what happens when things are not so good and RS need their money back to continue to function.
For me the real question is how much of the PF is legally secured for the purpose of covering defaults, cannot be called on by another party and cannot be used even for a short period for any other purpose, IMHO this is the amount that should be used for the coverage ratio.
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