|
Post by df on May 30, 2017 16:30:45 GMT
I will be interesting to see which way this pushes RS. They could either, A/. Make a big fanfair about their (now almost unique in their marketplace) Provision Fund, or B/. Abandon it with a very very large sigh of management relief. Based on their current lack of need to encorage any new lenders I would put my money on B. So where does that leave the P2P plan..... FC - exiting due to switch to low fixed rate SME and property loans now gone Zopa - exiting due to low rates on classic, don't trust returns on Plus and now Safeguard kicked into touch RS - exiting due to low rates and declining confidence in PFs ability to survive effect of move to potentially higher risk (in downward economic cycle) SME lending Wellesley - Out due to low renewal rates and concerns over recent lack of loan origination So basically this only leaves a handful of credible perceived lower risk non-SME/property develpoment/bridge platforms like LendingWorks and Landbay but here rates are dropping as well. The only other option is to go swimming with the 12% sharks...... You can try Growth Street. 6.3-6.4%. The rates are likely to go down as more investors will join, but not as low as RS.
|
|
|
Post by misotu on Jun 16, 2017 9:25:28 GMT
One point and one question from me:
Point: The impending withdrawal of the safeguard lessens protection for current investors. The fund has always been able to use receipts to the safeguard fund from loans initiated after protected loan was made to help safeguard the investment. This will no longer be the case. In effect investors will be subject to REALLY finding out if the fund has sufficient funds to cover the lifetime of a loan without the fund having a constant source of funds topping it up. I wasn't going to mention the word Ponzi...oh my mistake? This is especially true for the very last people lending money through Zopa Classic.
Question: If there is money left in the safeguard fund after all loans have been repaid, will this be distributed to lenders and not Zopa, as I thought the trust should be run for the benefit of lenders not Zopa? If Zopa are planning to pocket the money then they should also guarantee that if the funds are not sufficient they will fund the shortfall, otherwise its a one way bet for them. Heads we lose, tails they win.
For the record I have never really liked the idea of safeguards or provision funds as they are not efficient, can give a false sense of security and allow the companies which control them to use them for dubious means with very little oversight.
You clearly understand this better than I do, but I wonder what will be the impact of the inability to transfer existing loans into the IFISA, coupled with the fee-free July sale? I rather assumed that a lot of currently-Safeguarded loans would be sold in July and re-financed through non-Safeguarded Core and Plus products? In which case, depending on demand, surely that will improve the Safeguard coverage position? I completely agree with you about any funds remaining in the provision fund in December 2022, together with income beyond that point from loans in default. Zopa is entitled to fees for administration, but why they should collect a risk-free windfall is beyond me. A distribution to lenders and borrowers seems way more equitable to me. Or possibly setting remaining funds against post-Safeguard bad debt until they are exhausted.
|
|
aju
Member of DD Central
Posts: 3,484
Likes: 917
|
Post by aju on Jun 16, 2017 9:43:14 GMT
One point and one question from me:
Point: The impending withdrawal of the safeguard lessens protection for current investors. The fund has always been able to use receipts to the safeguard fund from loans initiated after protected loan was made to help safeguard the investment. This will no longer be the case. In effect investors will be subject to REALLY finding out if the fund has sufficient funds to cover the lifetime of a loan without the fund having a constant source of funds topping it up. I wasn't going to mention the word Ponzi...oh my mistake? This is especially true for the very last people lending money through Zopa Classic.
Question: If there is money left in the safeguard fund after all loans have been repaid, will this be distributed to lenders and not Zopa, as I thought the trust should be run for the benefit of lenders not Zopa? If Zopa are planning to pocket the money then they should also guarantee that if the funds are not sufficient they will fund the shortfall, otherwise its a one way bet for them. Heads we lose, tails they win.
For the record I have never really liked the idea of safeguards or provision funds as they are not efficient, can give a false sense of security and allow the companies which control them to use them for dubious means with very little oversight.
You clearly understand this better than I do, but I wonder what will be the impact of the inability to transfer existing loans into the IFISA, coupled with the fee-free July sale? I rather assumed that a lot of currently-Safeguarded loans would be sold in July and re-financed through non-Safeguarded Core and Plus products? In which case, depending on demand, surely that will improve the Safeguard coverage position? I completely agree with you about any funds remaining in the provision fund in December 2022, together with income beyond that point from loans in default. Zopa is entitled to fees for administration, but why they should collect a risk-free windfall is beyond me. A distribution to lenders and borrowers seems way more equitable to me. Or possibly setting remaining funds against post-Safeguard bad debt until they are exhausted. It might be worse than that and the existing fund was a bit like a ponzi scheme, as the funds are depleted over the remaining 5 years for the last loan to complete the funds may have already been used up by that time anyway. Just a suggestion though.
|
|