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Post by mukiwa on Dec 9, 2016 14:41:25 GMT
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registerme
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Post by registerme on Dec 9, 2016 15:41:46 GMT
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Post by westonkev on Dec 10, 2016 9:23:40 GMT
To be fair, this isn't RateSetter specific. It's the output of an on going review of the entire industry of P2P lending and equity crowd funding. In fact I don't think this Guardian mentions RateSetter, it focuses on Zopa and Funding Circle.
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oik
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Post by oik on Dec 10, 2016 12:50:48 GMT
“Are they marketed transparently? We’ve seen firms which say: ‘We’ve got a reserve fund and no one has lost money on our platform.’ But there is no guarantee.” Sounds familiar. "Christine Farnish, who chairs the P2P Finance Association industry group, said she welcomed the FCA’s review if it used evidence to assess the sector." Why would she think an FCA review might not make use of evidence I wonder.
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pip
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Post by pip on Dec 10, 2016 16:02:31 GMT
While in some sense I agree risks should be clearly explained and more importantly there should be even more disclosure of consistent metrics so investors can assess the change of risk over time. One example where there has not been consistency is the provision fund calculations of raresetter which have had so many goalpost changes to make comparisons year on year impossible.
HOWEVER if somebody loses money on any p2p site and claims they didn't understand there were risks they are trying it on. You get rates way way above what you can get in accounts with fsca protetection and with that comes risks.
I personally don't like the provision fund model as it could create a false sense of security as you create scenarios where people for years could go from losing nothing to a lot. I prefer to get higher rates and see and feel the pain of defaults and sense it changing over time.
I do though agree that with many p2p now, especially zopa and ratesetter it's becoming hard to distinguish them from investment funds, and therefore regulation should reflect this. If you take an non uk example lending club it's getting pretty hard to see this as a p2p lender at all. With zopa opening a bank the distinctions are closing all the time.
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Post by newlender on Dec 10, 2016 18:46:59 GMT
I totally agree - the warnings are there and clear to see. Although RS does plug the fact that nobody has ever lost a penny on that platform there are other warnings elsewhere on the site that speak of the potential risk. My first reality check with P2P was when the Z+ defaults started rolling in, including a couple that had never made a payment. A few months' potential income was halved as a result. If you compare these and similar sites with Seedrs there is quite a difference. Seedrs tell you at the outset that most startups fail and that you are likely to lose your money; in my view it's a bit too depressing but at least it's honest. So far my £5K+ investment there hasn't made a penny and a couple of my companies are looking decidedly shaky. But investing is one of my hobbies and it's fun. One thing that I think would be good would be for RS, Zopa etc. to give a % of assets that should not be exceeded in P2P; I expect that they and the actuaries could come up with a figure. Seedrs do this OK. It's hard to know if there are really folk out there who are cashing in their cash ISAs to move over to P2P but I bet there are some. I think that more regulation is now needed as things are getting a bit frenetic and out of kilter - look at Zopa's refusal to take new funding over Christmas as they don't have the borrowers they need. Seven million pounds queued in just one product when I looked last week (presumably new money).
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jonah
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Post by jonah on Dec 10, 2016 19:42:33 GMT
newlenderi will (subject to what it looks like at the time, management costs etc) be moving cash from cash ISAs to p2p ISAs when I can. I will be drawing down my unwrapped p2p investments though so the overall percentage won't change too much. Finding a home for my ex-p2p cash is going to be a pain I suspect. Vcts might be part of the answer for next year though.
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Post by stevepn on Dec 10, 2016 22:07:16 GMT
Years ago I lost money in the Barlow Clowes scandal and I see the same happening with P2P. More money is piling in all the time with the offer of good returns but all these companies are doing is playing with lenders money not their own. If borrowers don't pay back does it matter because new money coming in that will cover the debts. To put it bluntly I think some P2P (but not Ratesetter) are basically Ponzi schemes which pay good returns but if people suddenly want to withdraw the whole pack of cards comes falling down.
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Post by westonkev on Dec 12, 2016 20:05:21 GMT
......but if people suddenly want to withdraw the whole pack of cards comes falling down. Also known as a run on the bank!
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jonah
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Post by jonah on Dec 12, 2016 21:04:30 GMT
......but if people suddenly want to withdraw the whole pack of cards comes falling down. Also known as a run on the bank! Or doing a northern rock...
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alender
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Post by alender on Dec 12, 2016 23:20:08 GMT
The effect would only be temporary if the platform can withstand a reasonable amount of withdrawals. confidence would be re-established after a short time when nothing bad happens. However with short term money being used to fund longer term loans (like Northern Rock) this would cause a lock in of these short term funds and then the pack of cards comes down.
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Post by dualinvestor on Dec 15, 2016 12:22:50 GMT
Although RS has faults and I agree that phrases such as "not a penny lost" do give a false sense of security, I do not believe there could be a "run on the bank" scenario for RS or any other P2P platform. People may try to head for the exits but as the platform is not the counter-party they, generally, will not have to pay them, lenders will have to wait for borrowers to repay or for others to buy their debts. This might cause a cessation of business and maybe invoke run-off procedures that platforms are required to have but, in itself, unlikely to cause catastrophic losses.
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alender
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Post by alender on Dec 15, 2016 14:02:47 GMT
It is unlikely to cause a catastrophic loss but it would bring down the platform as there will be no money to pay salaries etc. This in turn would need another party to get involved to unwind the loans, this will incur costs which can only be met by the borrowers so there will be losses but difficult to predict the amount.
Recently Share radio have had a few articles on the FCA investigation into P2P, from what I can gather the main concerns are P2P looking more like banks by breaking the link between the borrower and the lender, I belive these are products where the P2P platform just allocates lender funds to a selection of borrowers like RS. Also the lack of explanation of the risks especially in the area of provision funds where the FCA are less than impressed.
I suspect these are some of the reasons why the ISA accreditation is taking so long as Share radio has reported on one P2P platform which operates a simple model which have been approved for ISA.
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roy
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Post by roy on Dec 16, 2016 22:30:26 GMT
For crying out loud....
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