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Post by westonkevRS on Oct 13, 2016 19:07:47 GMT
Another possibility is that there has been a large recovery of a loan held by the institutional investors. If you reconcile different estimates, it appears the bad debts on these have been significantly higher than the retail portfolio. The figures on Provision Page are for the entire loan-book including the institutional. As the institutions don't participate in the PF, none of this recovery would go into the PF!
- PM I doubt it, as the " institutional investors" were not involved in large size loans. And RateSetter share of institutional money is <5% of total outstandings (although lager for the 2014 cohort, which is where some of the higher bad debt overall was originated) Kevin
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robski
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Post by robski on Oct 13, 2016 19:32:29 GMT
Its across the whole loan book, im seeing zero bad debt for loads of the early months that used to have debt, but significant amount of the other earlyish months have a vastly reduced bad debt
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robski
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Post by robski on Oct 13, 2016 19:37:10 GMT
Actually looking again maybe it was the debt sale but why was there no apparent movement in the provision fund?
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wapping35
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Post by wapping35 on Oct 21, 2016 15:49:50 GMT
I have emailed RS re the inconsistent statistics for the default rate. Notably the 2014 number where the Excel down load rate is 3.13% v 2.873% on the web page.
They replied yesterday as below (a holding reply whilst they find out why): ===========
Good Evening, Thank you firstly for your email and your patience, I’m sorry for the delay in getting back to you. We work with a number of different metrics in different areas of the business, some of these include Institutional lending for example, which is not covered by the Provision Fund, and others don’t. For these reasons certain figures can vary, but our intention is always to display accurate and consistent data on our website. I’d like to thank you for bringing this to our attention and I would like to assure we are looking into it. Once we have located and fixed this particular discrepancy we will be in touch. If there is any further I can assist with, please don’t hesitate to get in touch. Kind regards,
===========
I have asked again which number is correct ? 3.13% or 2.873%...
And pointed out that since the institutional lending is meant to be the same mix of loans (and indeed a small % of total lending) that institutional lending cannot be the reason the numbers differ. Unless of course institutions do get a different mix of loans .
I will cut / paste their updated reply when I get it.
Thks
W35
Edit: p.s. I have also asked depending on which ratio is correct does it impact the published coverage ratio ? That is the 129% rate, which could be lower / higher if the wrong ratio is being used.
Thinking about it I guess (and it is a guess) the 2.873% rate could result from it being the PF defaults / (The total 2014 loans including institutions) & the higher rate (3.13%) could be the correct number , that is PF defaults / total retail loans..
My major interest is discovering what the true default rate is and whether the published PF coverage ration is impacted (positively or negatively)...
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wapping35
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Post by wapping35 on Oct 25, 2016 9:39:47 GMT
Update on my question. Again a holding email from RS. I have to say I am a tad surprised they need to research which statistic on their website is correct. ========== Hello, That won’t be a problem, once we have looked into which figure is correct, you can also expect to have both of your points clarified as well. In the meantime if you we can be of any further assistance please just let us know. Kind regards Danny ==========
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jlend
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Post by jlend on Oct 25, 2016 9:48:31 GMT
Update on my question. Again a holding email from RS. I have to say I am a tad surprised they need to research which statistic on their website is correct. ========== Hello, That won’t be a problem, once we have looked into which figure is correct, you can also expect to have both of your points clarified as well. In the meantime if you we can be of any further assistance please just let us know. Kind regards Danny ========== I have found that posting questions as responses to the blogs on the ratesetter website can often get a quicker response from ratesetter. Might be worth a try.
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wapping35
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Post by wapping35 on Nov 16, 2016 16:26:09 GMT
I see RS has just changed (may be corrected) the Actual Default Rate on the RS Info page..
2014 Default Rate is now 3.292% up from 2.927% this morning..I presume this is part of them auditing their published statistics.
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jlend
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Post by jlend on Nov 16, 2016 18:02:16 GMT
I see RS has just changed (may be corrected) the Actual Default Rate on the RS Info page.. 2014 Default Rate is now 3.292% up from 2.927% this morning..I presume this is part of them auditing their published statistics. I think the provision fund usage % has gone up as well for 2014. This will feed through to their expected losses for 2015 and 2016 and the overall coverage ratio I assume at their next review
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wapping35
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Post by wapping35 on Nov 23, 2016 14:44:02 GMT
An updated reply from RS on the statistics: ==================== Good morning, Thanks again for your email and your patience waiting on the response. In regards to the loan book downloads, both are unfortunately still inaccurate and this is something we are working to fix as soon as possible. The publicly advertised rates are however 100% accurate and are the rates which should be referred to in the meantime. The error with the loan books has occurred whilst extracting data from our system and again we will continue to work on rectifying the issue to provide the correct data. At RateSetter, as you are aware, we are looking to a build a very transparent peer to peer company by providing as much of our non-sensitive data to customers as we can. We have no obligation to do this but feel it helps build a trusting relationship with the users of our platform and is something we will continue to do. Both links below contain accurate information in regards to the provision fund, cover ratio and RateSetter statistics, again it is the downloadable loan books which are showing incorrectly. members.ratesetter.com/ratesetter_info/provision_fund.aspx www.ratesetter.com/aboutus/statistics I hope this clarifies the situation however if you do need further details in regards to this, please do not hesitate to get in touch. Kind regards, Rachel ======================= I have followed up on their email with a few further questions. Notably whilst I accept RS may not be fully obliged to share the default data in full, I have pointed out the FCA would expect the data they do provide to be correct. i.e. incorrect data is arguably worse than no data. I have also asked why the 2014 default rate rose on Nov 16th from 2.927% to 3.292% (in one day, it equates to a +£1m default), i.e. was this a large default or a data correction. Secondly I have asked why are RS using 2.8% as the PF funding level when the statistics page for which they have provided the link to (and confirmed to be 100% correct) indicates updated life time projected defaults for 2014,2015 & 2016 are all well above this level ? Anyway FYI only W35.
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wapping35
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Post by wapping35 on Nov 28, 2016 13:53:55 GMT
Okay RS replied and it seems to answer the issue, but obviously this means that coverage ratio will shortly be falling v close to 100% ( I compute 107/108% = 2.8/3.1 x 119% currently).
It seems the PF funding rate will be rising shortly to 3.1% (Nov 30). They explain below why its not nearer to the 3.43% which they project is the expected default rate for loans written in 2016. I am not sure if I fully agree/understand with the rationale but at least I have their rationale now and can make my investment decisions accordingly. FYI only and I hope this helps...
=============
Dear Chris, Thanks again for your questions and apologies for the delay in responding. The 2014 default rate rose on November 2016 due to the correction of a temporary error. To answer your second question, the 2.8% figure actually reflects the expected liabilities to the Provision Fund as a percentage of all outstanding lending. The figure for all outstanding lending includes loans which are not covered by the Provision Fund (institutional investors are not covered by the Provision Fund), and therefore I agree with you that it is not the best figure to use on this page. Removing loans which are not covered by the Provision Fund gives the correct figure, which is approximately 3.1%. This is clearly a more useful figure for retail investors so we are updating this as a priority, and expect to get it resolved with our next set of changes on Wednesday 30 November. To be clear, we are not using the 2.8% figure to inform our Provision Fund calculations – this figure is calculated based on actual expected loss figures for each cohort, which in turn are based on actual loss rates for similar loans in earlier cohorts. The reason for the discrepancy between the 3.1% figure and projected lifetime bad debt rates by cohort is that the former is a mix of both relatively new and also mature loans. Generally, loss rates diminish over time (for example, a 5 year loan which has only 6 months left is less likely to default than a newer loan, all other things being equal). The two metrics aren’t like-for-like. I hope these answers are useful. Thanks and kind regards, Danny D********
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jlend
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Post by jlend on Nov 28, 2016 20:24:23 GMT
It would help on the 30th if they spelt out all the things they have updated or corrected recently in a note to lenders including thing's like this
"The 2014 default rate rose on November 2016 due to the correction of a temporary error."
Just to get everything out in the open...
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wapping35
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Post by wapping35 on Dec 1, 2016 9:06:37 GMT
Quote from RS:
"Removing loans which are not covered by the Provision Fund gives the correct figure, which is approximately 3.1%. This is clearly a more useful figure for retail investors so we are updating this as a priority, and expect to get it resolved with our next set of changes on Wednesday 30 November."
=====
So its now Dec 1 and the update did not occur. Sums up the RS communication strategy really.
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jlend
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Post by jlend on Dec 2, 2016 6:52:26 GMT
Quote from RS: "Removing loans which are not covered by the Provision Fund gives the correct figure, which is approximately 3.1%. This is clearly a more useful figure for retail investors so we are updating this as a priority, and expect to get it resolved with our next set of changes on Wednesday 30 November."
===== So its now Dec 1 and the update did not occur. Sums up the RS communication strategy really. On the graph on this page www.ratesetter.com/invest/everyday-account/protection it says the expected default rate is 3.2% I am not sure how this relates to the 3.1 and 2.8
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wapping35
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Post by wapping35 on Dec 2, 2016 8:18:34 GMT
I am not sure if RS know either. The Statistics page still has 2014-2016 projected defaults of 3.93%, 3.71% & 3.43% (2016). www.ratesetter.com/aboutus/statisticsHow can an lender know which statistics are correct or a reliable guide ? From what I can see RS don't know... Perhaps the delay in publishing the 3.1% is down to them trying to figure that out (or correcting it again) or explaining why 3.1% and the reduced coverage ratio it should produce is okay.
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Liz
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Post by Liz on Dec 11, 2016 16:02:02 GMT
Do RS still publish a statistic for "interest earned by members"? I know it used to be under "Ratesetters", but that tab seems to have vanished. Thanks
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