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Post by misotu on May 11, 2017 10:48:04 GMT
Finally! Excellent news and sensibly only for existing investors initially according to the emails we received this morning
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Post by misotu on Nov 7, 2016 9:25:10 GMT
Gosh,very sorry to hear this news westonkev. Your frank, informative responses here boosted my confidence in RS - specifically in the calibre of its personnel, heh - to the point where they have the lion's share of my p2p money. Thanks for all the information and the posts. Some of them were very funny Best of luck wherever you're off to.
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Post by misotu on Oct 10, 2016 12:42:15 GMT
Anyway back to the conspiracy theorists........ Indeed - I definitely think that there's a conspiracy - Ratesetter wants to make profit - outrageous - it's only us investors that are supposed to make a profit... More seriously, it is not clear how a buyout formula could be transparent given it must react to changing future rates. Jack P No-one objects to RS making a profit. That would be silly, wouldn't it Jack? I'm not sure why you think buyout formula transparency is a problem. When you choose the sellout option, a charge is calculated comprising fees and interest clawback. Asking for a detailed statement at that point, showing how the figure is reached, including the interest rates used and the dates over which said rates have been applied, is hardly unreasonable, is it? And it's perfectly practical. There is obviously a problem here when RS state that "average" rates are calculated for sellout in an email that links to a blog stating that a "snapshot" rate will be used. There's obviously a problem when they give the impression that selling 5-year money after 4 years would be based on the 3-year rate but then in response to a direct written question say in fact it'll be 75% 3-year and 25% 1-year rate. Wanting clarity, consistency and transparency hardly equates to objecting to RS making a profit, does it now?
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Post by misotu on Oct 9, 2016 10:50:23 GMT
Alas savers are not protected, hence why the universal approach to prohibitive fees on bond savings products - typically you can either not get your cash or you pay 1-years interest. RateSetter looks positively fee-free in comparison to majority of banks and Building Societies. Ultimately if you want a low/free fee loan parts sale market, thew are plenty of other platforms. Although they tend to be riskier platforms, IMHO. Kevin. I don't want either low or free fee access. What I want is *fair* access, including a penalty, that is comprehensible, transparent and consistently explained by RS. See the above posts - the whole sell-out fee situation is a dog's dinner with RS issuing conflicting advice and a ridiculous lack of transparency in the sell-out fee calculator with particular regard to the interest rates applied and over what term. In addition, there are situations where sell-out fees are unjustifiably high, as other posters have pointed out. Aside from this, RS has made no statement on how the sell-out formula will work for five-year loans taken out before the demise of the 3-year market. Your blog says that the 3-year snap-shot rate applies, which makes it simple enough. But the email I have says an "average" rate over the term. The possible permutations are numerous and, given that you weren't even applying the 3-year rate to the whole 4 years on 5 year loans sold out a year early, I have to say that I have very little trust in calculations I can't see or check.
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Post by misotu on Oct 9, 2016 10:08:02 GMT
That wouldn't be reasonable though, would it? The three year market was offering silly low rates in the run-up to closure, often the same as the one year (occasionally lower, IIRC!) 3.7% is significantly higher than it was in quite a few periods. But I thought the comparison was with the MR on the day the longer loan was acquired. If that is the case, this is only a prospective change and any loan bought before the change will presumably still have the option to earn the 3 year MR on the day it was acquired if sold after 3 years of holding. I understand why people don't think that the level of fees charged to sellout loans held for a long period is reasonable, but I also understand why RS want to ensure no one can gain by buying and then selling loans. This has been long discussed, but that is not the line of this new thread.
- PM
Depends whether you believe the RS blog or their emailed advice I'm afraid. Blog says it's a snapshot, July 2016 email says: "I can confirm when a sellout is performed after 4 years for example on the 5 year income market, you would be received interest based on the average market rate for the 3 year income market for 3 years and the average of the 1 year market rate for the final year. The interest earned would be up to the date prior to the sellout and from the date after the contract was formed. In addition you will be charged a flat rate of 0.25% and also possibly an assignment fee." Note also that the 3-year rate, however calculated, only applies for 3 of those years. For the fourth, apparently, you only get the 1 year rate. Counter-intuitive much? Sounds a bit sharp to me. While we're on the subject, what on earth does "The interest earned would be up to the date prior to the sellout and from the date after the contract was formed." mean? Does it mean the day after the contract was formed and the day before the sellout? That's not what it says. These "dates" could be anything at all - a month different, a week different ... Given all this, if RS refuse to change the formula, they must at least provide a detailed sellout-fee calculation, showing the interest rates applied and how these have been calculated. Vague arm-waving explanations on the web site are clearly insufficient.
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Post by misotu on Oct 9, 2016 9:49:13 GMT
But the rules on which we based our decisions have now been changed, to our detriment, mid-contract. Have they? Nobody ever promised that 3yr would be near to 5yr rates - and, for quite a while, it's been a long way from them. Nobody ever promised that the 3yr market would always be there. Look at what the FAQ says... That's all. No promises. Except that there's no change in the practical disparity, as the three-year rate has been down at one-year levels for quite a while. Look at the market data graph - www.ratesetter.com/aboutus/statisticsStrip all bar the 1yr and 3yr rates out, and take the time down to the last year or so. Oh for goodness sake! There is the letter and then there is the spirit. We are on different pages. I am well aware that the rates for the 3-year market have recently been very poor and that no-one ever made a promise in this regard. The point is that an ordinary investor would expect there to be a sensible interest range between 1, 3 and 5 year markets. Indeed, RS expected this and have closed the 3-year when it failed to perform thusly. So no promises, no, but a general expectation on the part of both platform and lenders. And now we have the problem of a big disparity between 1 and 5 year rates, as I said originally. I wrote to RS to ask yet again for a more comprehensible explanation of their sellout formula. They sent me a link www.ratesetter.com/blog/article/an_update_on_sellout and here's what it says: So, a 5 Year Income contract sold out after 1 month receives the Monthly Access rate, after 12 months the 1 Year Bond rate, and after 36 months the 3 Year Income rate. These rates are based on a snapshot of the rates and markets that were available the day the contract was formed. OK, sounds reasonable. But in the email containing the link they said: I can confirm when a sellout is performed after 4 years for example on the 5 year income market, you would be received interest based on the average market rate for the 3 year income market for 3 years and the average of the 1 year market rate for the final year.
So it's either a snapshot or the average, we're not sure. Oh, and for some reason your money that has been in for 4 years doesn't get the 3-year rate for those 4 years. Er ... why not? Were you aware that money in there for four years would only get the 1 year rate for part of that term? I wasn't. How could I be? After all, the sellout calculator doesn't show the interest rates they've applied. Do you find that acceptably transparent and accountable? So in addition to being excessively punitive beyond the point of deterring the "gaming" that RS find so repugnant in punters and prefer to reserve for themselves, I suggest that the formula is poorly and inconsistently explained to customers, and there is an unacceptable lack of transparency regarding the calculation of sellout fees, with particular reference to the rates applied. All I am saying is that this is a golden opportunity to address this problematic area. I am still saying that. I have not said that I want fee-free access to my funds. I have said that I would like to see a better balance between a penalty for withdrawal and fair treatment of lenders. I am still saying that.
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Post by misotu on Oct 9, 2016 8:31:49 GMT
Oct 6, 2016 13:15:08 GMT 2 sl75 said:
If you genuinely expected the fee in the scenario described to be around an £8 fee, then RateSetter may have mis-sold their product to you by failing to adequately explain how their fees are calculated, and you might want to consider an official complaint if this was a material consideration when deciding to invest.
I have now asked RS twice, in writing, to give me the exact formula used to calculate sellout fees. Both times they just tell me to go to the sellout option and work through the process which will show me what it would cost to withdraw funds. But this doesn't show how the fee is calculated - it just gives a number with no explanation at all. I don't understand how the sellout formula works, except in rough terms, and RS won't tell me, so yes I think by any measure they have failed to explain adequately how their fees are calculated and have deflected requests for that information.
If I use the website sellout function is there a way of seeing how the fees break down and how the interest has been calculated? I particularly want to know what interest rates have been applied for what periods, and exactly how these are calculated.
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Post by misotu on Oct 6, 2016 8:24:30 GMT
Interesting thread to read. Isn't what the Rolling market doing (using longer period loans for short term lending) also "gaming" the system and "gaming" the yield curve. Or is that just legitimate intermediation that any well functioning market would do. In the end RS sets the rules and you choose what to do. Wry grin over here on the gaming observation. westonkev no doubt sees it differently. They are gaming with quite a lot of my money at the moment, so hopefully he'll bear that in mind when addressing my concerns You're right, RS sets the rules and we choose what to do. But the rules on which we based our decisions have now been changed, to our detriment, mid-contract. That's one point. And the other is that the basis of the present formula is highly unsatisfactory going forward, given the disappearance of the three-year market and the disparity between one- and five-year rates. I'm not arguing that there should be no penalty, nor that RS should not levy a charge for the admin.
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Post by misotu on Oct 6, 2016 8:08:02 GMT
It seems that RS have frozen the 3 year rate at 3.7%. Not sure whether this will be used for sales of any loans purchased after today that have been held for 3+ years.
- PM That wouldn't be reasonable though, would it? The three year market was offering silly low rates in the run-up to closure, often the same as the one year (occasionally lower, IIRC!)
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Post by misotu on Oct 6, 2016 8:00:12 GMT
Regular forum members will know that with the exception of death, I have limited sympathy in terms of what is considered fair exit fees, or how they are determined. There are so many factors to consir, not least not rewarding the "gamers". Lenders choosing 5-years are rewarded with higher rates, that's the yield curve in action. If we had to provide cheaper sell-out costs, that "insurance" would have to be paid from somewhere, and it would probably mean lower returns. Personally I prefer to get higher returns, understanding that my money is tied up exception for an emergency for which I'll be charged. I don't see why my returns should be lower to support others. I appreciate that exit fees are lower at some other platforms, and that will be part of their overall package that you should consider. Of course we could copy the Banks and Building Societies, for example Nationwide BS pay 1% AER with very prohibitive sell-out fees: Which is almost guaranteed to mean you'll lose some capital, not just a reduction of interest. I know that they are FSCS protected, hence the difference in 1% AER to the risk based 5%+ AER from RateSetter. But that doesn't explain any other product differences. Kevin. I was aware of your view already, but this is a different issue. It is a legal and ethical issue. When I invested my 5-year money, I understood that there was a three-year market and that this three-year rate would be used, as appropriate, to calculate my sell-out fees in the event that I had to sell early. You have now changed this, massively to my detriment. I don't think you can do that legally, as it seems to be a fundamental part of my original agreement with RS. And I don't think you should do it ethically, especially given that P2P is "all about trust". Seems to me there is a golden opportunity here to take a good long look at the sell-out formula and revise it to reflect in a more balanced manner the need to deter gaming while avoiding excessive gouging for profit. But at the very least we need clarity for the investors who put money into five-years prior to the demise of the three-year market.
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Post by misotu on Oct 5, 2016 11:31:26 GMT
Now that the three-year market has gone, sell-out charges for five-year loans will be unacceptably high if based on the average one-year rate.
As it is, the cost of selling my existing five-year loans is around 3% of the value of my funds according to the web-site.
This compares pretty poorly with Zopa's Classic fee of 1%.
Are there plans to revise the formula now?
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Post by misotu on Aug 4, 2016 9:37:32 GMT
I read the press release which is pretty straightforward. But I'm wondering, possibly unfairly, exactly what real progress has been made since the Government announced that the IFISA would be launched this tax year and would apply to P2P?
I know some posters here are very pessimistic about the chances of a PSP IFISA from Ratesetter or Zopa being available this tax year. On the other hand, westonkev of RS has no indication of a timescale but says there's no "major stumbling block" for RS gaining FCA authorisation.
As I understand it the FCA has no interest in any ISA deadline and is focused simply on the authorisation process. So it seems only the platforms themselves have any interest in driving forward the availability of an IFISA? No-one in government seems to be taking an interest in an initiative from a former chancellor.
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Post by misotu on Aug 4, 2016 9:25:40 GMT
Thanks for the reply westonkev - the confirmation that there's no fundamental stumbling block is exactly the kind of info I was hoping for. Cheered me up no end until I read the other posters who have formed a different impression from the FCA information.
Very frustrating, I've lost so much interest making provision for this. On the one hand I am all for proper regulation and FCA scrutiny. But on the other, I already have a proportion of my savings committed to P2P so frankly all the delay does for me (and I suspect a lot of others) is cost me tax and lost interest because I'm trying to keep funds available to move over into the IFISA rather than re-investing in 5 year.
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Post by misotu on Aug 3, 2016 11:16:33 GMT
Therefore RateSetter and especially myself can only speculate. As a gambling man I'm betting on late July 2016. But this is pure guesswork and speculation, please don't base any investment decision on this. Kevin. Well good thing you didn't actually place that bet! The silence on this is deafening from both RS & Zopa. Not your fault and I don't suppose you have anything concrete still. Based on how it's going (assuming you know any more than we do!), can you reassure us that there is every chance of something being available before the end of this tax year? I realise there are no guarantees but I'm keeping so much dosh in rolling and access just waiting for the IFISA to be announced by one of these two platforms, and the entire subject just seems to have dropped out of view. I know I have the option of taking an easy access ISA pro tem, but the rates are terrible so that would be a last-minute emergency move to use the allowance.
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Post by misotu on Jul 10, 2016 18:55:58 GMT
Due to changes to tax relief guidelines for peer to peer loans we have now split out recoveries from defaulted loans that previously were eligible for tax relief as these are the only recoveries which are taxable. We also have additional guidance on which bonus items are taxable so this again might help explain any differences (please see our FAQ). Previously we did not provide earnings and principal lost figures to declare to HMRC and lenders were required to work this out for themselves. The new statements have removed items that are unlikely to be taxable based on guidance from HMRC. If you have an account specific query please get in touch with our lender specialist team on 020 7291 8331 and they can provide further clarification. Thanks for the reply and I am currently trying to plough through the FAQs. What I am perplexed by, however, is that if I had used the earlier version I would have declared around £25 more income. I don't understand what is meant by previously lenders being "required to work out" earnings and principle lost figures "for themselves". What does that mean? Would it have required obtaining additional data not shown on the original statement? Using the figures from the old statement, I cannot arrive at the new figure at all. I can see the differences, and I think I understand the somewhat technical explanations of the tax treatments of various types of payment. But your email states that if I've already used the old statement not to worry, because it was correct and from my documents I simply cannot see how that would be true. However, since no-one else seems similarly baffled I'll go away and peruse everything, see if I can spot my error!
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