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Post by Financial Thing on Feb 2, 2017 15:12:06 GMT
So from reading all comments and reading the terms again, I think I can surmise that:
A. Ratesetter put provisions into their business model that if all hell breaks loose, there is a way to to stop the bleeding
and
B. If it gets to that point, RS is probably in dire stages of health and at the end of its days so the PF wouldn't matter much long term either way.
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Post by marcusponds on Feb 2, 2017 16:05:00 GMT
So from reading all comments and reading the terms again, I think I can surmise that: A. Ratesetter put provisions into their business model that if all hell breaks loose, there is a way to to stop the bleeding and B. If it gets to that point, RS is probably in dire stages of health and at the end of its days so the PF wouldn't matter much long term either way. My own perceptive is more like: If hell is on the horizon, Ratesetter can now eat more beans (admittedly, our beans) to enable it to run in the opposite direction, avoiding damnation.
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alender
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Post by alender on Feb 2, 2017 16:15:31 GMT
Or to put it another way if RS are in trouble they can keep going until they have eaten all of the investors beans.
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toffeeboy
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Post by toffeeboy on Feb 2, 2017 16:33:43 GMT
This to me says that if bad debts get too bad then rather than admitting the company has failed and ceasing to flog a dead horse then they will do a Greece and dip their hands into our accounts and support the business from that whilst continuing to create new loans from the part that is returned or new money.
Hopefully as with Zopa in 2008 as has been mentioned it doesn't go further than the interest that is being returned and therefore everyone has to accept a lower return for a while rather than it reaching the point that money is being lost as for me that would count as a failed system and why I liked the previous terms.
This looks to me like papering over the cracks and assuming that the PF is dry then it makes the PF into a kind of Ponzi scheme as the new loans that have been made are surely being used to prop up the older loans that have defaulted or have I misunderstood something in that respect.
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toffeeboy
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Post by toffeeboy on Feb 2, 2017 16:36:03 GMT
I understand if you wish not to answer westonkev but would this be the direction that you didn't like that ratesetter were taking, either way obviously your views on this subject would be extremely valuable.
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rick24
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Post by rick24 on Feb 2, 2017 17:18:28 GMT
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Post by ruralres66 on Feb 2, 2017 17:35:10 GMT
I have received a reply email from RateSetter,
".....thanks for your comments. This is an important update and we have therefore contacted every RateSetter lender directly via email to advise them of this change. In any case where the email has not got through (i.e. we receive a bounce back), we are writing to the investor in the post.
The new lender terms can be accessed via the blog on the public site and also via the RateSetter Notices section in the members’ area, and we have added a link to a list of changes to the Lender Terms too [https://members.ratesetter.com...].
I hope this addresses your concerns, but if you have any further questions or doubts, please feel free to contact us on 020 3142 6226 or at contactus@ratesetter.com."
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spiral
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Post by spiral on Feb 2, 2017 17:36:15 GMT
I have just done a quick calculation based on RS 5yr @ 5% compounding, best buy B/S 5yr @2.05% compounding. I reckon you'd need 100% interest deducted for about 30 months to return about the same, however, if they use the capital reduction, that only needs about 11% to wipe out your gains. What is the difference between Provision fund coverage and capital coverage ratio which are the 2 terms used to denote what type of reduction will occur?  |
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Post by WestonKevTMP on Feb 2, 2017 17:56:44 GMT
I understand if you wish not to answer westonkev but would this be the direction that you didn't like that ratesetter were taking, either way obviously your views on this subject would be extremely valuable. I think it is a very good change. And very fair in terms of the fee-free get out. I mean even people that wanted out for whatever other unrelated reason can use this opportunity. When Zopa bad debt increased in 2008/2009 lender returns reduced to near zero, they had to use the lost interest to clear bad debt. But they preserved capital and continued trading, and now lenders have benefited for 11 years of P2P lending. A much better performance than the stock market.... Under the old rules, in a similar circumstance RateSetter would be forced to call a resolution event and ultimately close. This would mean the end of a good platform with excellent longer term prospects, and possibly worse returns because the platform would have reduced incentive to maximise portfolio returns. This change gives management the ability to continue trading. Perhaps reduced interest, but not a black or white decision on continue or call call a Resolution Event (and near certain end to the platform). And even in calling a Resolution Event, they could get this wrong if expected bad debt isn't as bad as previously forecast. It would be the end of a good platform when it wasn't actually needed. A Resolution Event call also removes the ability to manage their way out of any problems through cost cutting or increasing Provision Fund contributions on future loans to cover the under allocation of the past. All said, I think this is a very sensible change. The Resolution Event made sense at launch, but now 6 years later it needed a change to be more practical of potential reality. Kevin.
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Post by deddington on Feb 2, 2017 21:49:06 GMT
I wonder if the offer to cash out includes all the loans below the £10 threshold that were ineligible for cash out before? I will find out as that is all I have left with them.
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markr
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Post by markr on Feb 3, 2017 0:56:44 GMT
Far more important than RS's provision fund changes is the revelation that WestonKevTMP is now at The Money Platform. Any chance I can trade in all my RS mugs for TMP mugs? And any chance of the 500 quid that's been in my wallet since November actually being lent out? |
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ashtondav
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Post by ashtondav on Feb 3, 2017 2:11:12 GMT
The resolution event model was always daft. RS had enough information to know that in a dire year like 2008 for zopa that they would be shafted. Why do that? Stupid is as Stupid does...
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adrianc
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Post by adrianc on Feb 3, 2017 8:17:10 GMT
Far more important than RS's provision fund changes is the revelation that WestonKevTMP is now at The Money Platform. I keep reading it as "HMP"...
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toast
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Post by toast on Feb 3, 2017 16:29:39 GMT
... I was with zopa during the tsunami of bad debt in 2008, and yes I received less interest but I lost no capital. And remember those were the days when you couldn't off set bad debt against tax... Bit of an aside, but can anyone point me towards info on when/what changed regarding offseting bad debt against tax? Thanks! Edit: Found myself the answer here... Bad debt relief for Peer to Peer investments
p2pindependentforum.com/post/166399/thread
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bababill
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Post by bababill on Feb 4, 2017 0:37:42 GMT
the S&P has delivered total returns of 15.7% compounded, the MSCI Global Equity Index 12.7% and the FTSE ASX 10.5%. I was lending on Zopa from 2005/07 and 2009/13, and I just don't remember making those sorts of compounded returns. Have you started dealing in "alternative facts"? Here are the alternative facts to what many 'stock brokers' / 'hedge funds' will like you believe: FTSE 100 February 6 2015 trading at 6853 Today FTSE 100 February 4 2017 trading at 7188 Less then 5% increase in two years
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