oik
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Post by oik on Jan 12, 2016 18:14:07 GMT
Lending on Ratesetter's "Monthly" market I sort of assumed I'd be lending for about a month or so: be it 28 days, or a calender month. Turns out that, for Ratesetter, a "month" can mean whatever Ratesetter decides it means.
Could be five weeks or more, or could be just 7 days before the money you thought you'd just agreed to lend for a month will need to be placed elsewhere. You won't know what a "Ratesetter month" is and for how long you've loaned your money until after you've loaned the money. For example, the loan for the few thousand I lent today, 12 Jan, I see is due to mature in just 7 day time on 19 Jan, while another loan made shortly before won't mature for over 5 weeks.
That's always assuming someone doesn't decide to end the loan even earlier, or more seriously, if Ratesetter have a liquidity issue in which case it seems they reserve the right to retain your loot for just about as long as they require. Or if Ratesetter has one of it's famous "hiccups" then the money you were told had been lent out won't have been lent at all.
Hopefully the financial markets will soon look more inviting so there'll be no more need for all the faffing about with the likes of Ratesetter. (And why anyone would lend through Ratesetter before making use of the FSCS protected current accounts paying 3-5%, as seems to happen, is a total mystery to me.)
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oik
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Post by oik on Dec 31, 2015 12:38:53 GMT
The technical issue is that the system has a time out for loans to form, I think it's around 30mins. This time-stamp was originally set because anything longer than this indicated a problem and hence an internal red flag for investigation and loan formation cancelled. Kevin. As this wasn't the first time, what steps have now been taken to resolve the issue and ensure it doesn't happen again? (It's normal for trust in competence to be earned by demonstrating the ability to run a jolly in a brewery, and probably not helped by implying that customers expressing mild irritation at being affected by recurring issues are just an annoyance who should push off and take their business elsewhere.)
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oik
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Post by oik on Dec 30, 2015 12:06:55 GMT
I'm a relaxed kind of guy, so it does confuse me when people get (overly?) angry about a genuine mistake with limited impact. We are trying to give investors a better deal than bank's savers, and usually we succeed. But as a small company hiccups will occur. Many owners of smaller companies won't take kindly to the idea that because they're small then "hiccups" are more likely to occur. They'd suggest that it's by being a smaller company that they can offer better service. As do most of the new "challenger" banks. The issue is not the extent of the loss to the lender but of having reasonable confidence in the competence of a company seemingly prone to mishaps and whether the management is addressing the issues to prevent them happening. For as long as I've quite a sizeable amount of my money temporarily entrusted to them then I'd rather like to know that they were.
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oik
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Post by oik on Nov 22, 2015 17:52:48 GMT
None of this would matter if casual lenders weren't caused to believe it all worked very differently. As with the Ratesetter email to noobies: "Early access. Want to earn the 5 Year rate but concerned about putting money away for years? Don't worry, with our Sell Out feature you can access your money at any point for a small fee. Find out more." (with a non-working link) much is less than clear. Writes Rhydian Lewis:So a rate set entirely by normal people agreed with each other on the internet. Well that's the story from a very energetic PR department...
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oik
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Post by oik on Nov 22, 2015 16:29:04 GMT
Please can you share how you managed to do so well using accounts which are FSCS protected. This protection, as you say is paid for by the Banks (which reduces interest returns) as part of the Banking Licence (fees/insurance paid to the Government) not by the Government as is often quoted. As a single person I have opened the following:- Santander 123, 1 account, £20,000 at 3%, some charges but more than covered by cash back BOS Vantage, 3 accounts £5,000 each at 3%, no charges Tesco, 2 accounts, £3000 each at 3%, no charges TSB Current classic 1 account, £2000 at 5%, no charges I have not bothered with the Lloyds account as it requires 2 direct debits per month (already get cash back from Santander for direct debits) or the Nationwide which only has high interest for 1 year. Do you know of any more? I'm married so able to open accounts in both our names and jointly. As of today, I'm holding exactly £145k in those current accounts. As you already have BOS accounts you may as well open a Halifax Reward which would appear alongside your other accounts when you login to BOS and would pay you another £60 pa net of tax (per account but I think you're only allowed to open one now). Halifax also pay a £100 for switching. The Nationwide FD pays 5% for only for a year (1% thereafter) but useful enough if you can be bothered. It also pays £100+£100 with it's 'Recommend a friend' switching bonus and when no longer required can be used to obtain switching bonuses elewhere. A year after closing you can open another at 5%. As already mentioned, if you don't have enough DDs then just set them up to pay into suitable savings accounts (can come straight back out again) or to make donations to worthwhile charities. With a Tesco savings account you can set up as many as you want and opening Birmingham Midshires savings accounts requires setting up a DD with a current account. There are far fewer worthwhile regular saver accounts now that I'm aware of, though many still seem to love them, but if you already have TSB and Lloyds accounts you might as well have their saver accounts if you want to hold more cash; they pay 4.00% and 5.00% and can be renewed as soon as they reach expiry. You'll probably get more ideas in the bank account or savings forums on MSE. Obviously, the smaller the sum the easier it is to get close to 5.00% or more overall. In truth, I concede the social policy justification for a guarantee but I do think it is set too high. As regards industry funding, at the end of the day that means funding by you and me (just as it would be if funded by the govt). It's not cost free. The sums I was talking about were too big for the current account game. I agree that for 5 figure amounts the current account game is worthwhile if you want to play it - although in playing it you are being subsidised by the very people you want to protect. 6 figures sounds like a stretch even if it's for a couple. So what would you judge to be the correct figure and how do you arrive at it? The FSCS figure comes under the European Union Deposit Guarantee Schemes Directive. That requires the limit to be harmonised at €100,000 throughout Europe which is why the current £85k drops to £75k on 1 Jan 2016 as a result of exchange rate movements. The FSCS is independent both of the government and of the finance industry and was set up under the Financial Services and Markets Act funded by an industry levy.
No it is not cost free but the costs are contained within the interest rate paid - just as the various costs to Ratesetter, such as for their 'Refer a Friend' offers in order to push rates to lenders down, are within the rate they offer. AFAIA all the banks I use are net contributors to the FSCS so I'm not too sure who you think is subsidising whom or whom you think I want to protect. Those who are effectively 'subsidised' through the FSCS are those who put money into banks or covered investments that later fail and I have never put money into such a bank (including the Icelandic banks, not covered by FSCS, that I avoided and recomended others to do the same). Nor have I ever needed compensation from the FSCS. The people who do subsidise the rate I receive I'm afraid are other savers with the banks I use who accept paltry rates from standard savings accounts and cash ISAs or who go overdrawn. I have no sympathy for those who are too lazy to sort out their finances but do sympathise with those who aren't well enough informed or have been led to believe that getting a better rate is difficult. Those who 'subsidise' me at Ratesetter are those who borrow at an excessive rate. Above all I would like to see greater transparency, both from the banks and from the likes of Ratesetter, but I don't see how my lending to banks at a lower rate would help in that.
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oik
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Post by oik on Nov 21, 2015 13:09:35 GMT
In principle he's absolutely right. The effect of the FSCS is to encourage depositors to place their money with the riskiest banks, because they know they will be bailed out. I've had term deposits with loads of fringe banks (though not so much recently). Without the FSCS I would not have touched them with a bargepole. What the FSCS also does is to protect smaller and less sophisticated savers from losing their life savings, most of whom have very little abilitity to assess how risky a bank or BS (or Ratesetter) might be. How many would have been aware, for example, of the risk before HBOS collapsed when it wasn't apparent to KPMG, their auditors. Nor is the FSCS a "state guarantee" as per the headline of the Lewis article: it's funded by the industry, not by the state. I would prefer to see Lewis trying to challenge the competition by making his own offering more attractive and certainly more transparent, not by lobbying to have his competitors made less attractive at the cost of smaller savers. Most importantly, savers should have choice: banks and building societies where small savers are fully protected as well as outfits like Ratesetter where your capital is at risk but which may give a better return. Choice shouldn't be limited just to help Lewis drive down the rates he has to pay and expand his business. I started using p2p when I could no longer get 4% for 4 year money even at a fringe bank. As my deposits mature I've been switching them into p2p and other alternative investments. On how much? You can still get 4%-5% with instant access from current accounts. I have a six figure sum in current accounts at between 3%-5% with an average rate of just under 4%. Unlike with Ratesetter I have instant access whenever I want it; I know my money won't be retained for far longer than the specified time (as allowed in Ratesetter's contract); nor will my money be thrown back to me before the specified time when they decide to do so. The likes of Ratesetter suits me temporarliy while I have a lot of cash waiting to be reinvested in markets. I wouldn't use it if I could squeeze still more cash into interest-paying current accounts and nor would I see it as a sensible alternative for most small savers who can get similar or better rates elsewhere without requiring better financial skills than KPMG.
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oik
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Post by oik on Nov 18, 2015 12:02:54 GMT
Quite a large P2P article in the FT's weekend edition. Rhydian is quoted talking about his expectation for rates to eventually: Is Banking about to be Uberised?www.ft.com/cms/s/2/cbba1ff2-65cf-11e5-a28b-50226830d644.html#axzz3rmyAQ16SRhydian Lewis, co-founder and chief executive of Ratesetter, says that as the P2P model proves itself, its cost of funding should fall, allowing the platforms to offer loans at even lower rates to less-risky borrowers. “If people start pricing us as a safe place then we will become much more competitive” Is that an expectation or a hope? It seems to me that many small savers are already pricing returns from some P2P lenders as if they were without risk. Come the next financial crisis and the inevitable shakeout there could be tears - with few outfits uneffected by the reputational damage. I'd like to see Lewis working to ensure that less sophisticated savers are more fully aware of the risks; rather than instead trying to make his business more competitive by lobbying to increase the risks to small savers who prefer to use conventional savings accounts. Rhydan Lewis: "In my view, we should abolish the FSCS for savings accounts entirely." ( From article by Lewis for City AM) No surprise there then.
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oik
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Post by oik on Nov 10, 2015 14:47:13 GMT
With all due respect almost all of that is pure nonsense and full of misunderstandings. But if you're happy then I'm happy. Take care
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oik
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Post by oik on Nov 10, 2015 14:08:43 GMT
oik So far all I see is current accounts (TSB, Lloyds etc) offering small deposit allocations small sums or Santander up to £25k with the requirements of direct deposits and other hassles. Since you have found a no-nonsense method to place £150k @ 3-5% in current accounts (without having 10 current accounts), and you are obviously a brilliant researcher (and apparently very smart and savvy) maybe you'd be generous enough to share the specifics with the forum? I'm sure if we all knew how to do this, we would ditch our low % p2p options and sleep much better at night. No, you've misunderstood, I do have more than 10 current accounts and you possibly also misunderstand the amount of hassle involved for anyone capable of setting up a SO or DD. I don't need to touch accounts from one month to the next other than to pick up the interest. For the amounts most people will want to hold as cash it's way less hassle than trying to get a reasonable return on the likes of Ratesetter without locking themselves in for years with only the unpredictabe "Sell out" option to bale them out. It hardly needs a lot of research and I and others posted details here only a few days ago. If you can't find them and are interested, then I'd be happy to find them for you or explain anything you don't follow but I'm not going to drag any horse to water. What interests me is that if people haven't researched and understood what's available from simple accounts with conventional banks then they're unlikely to be in a position to evaluate the more complex propositions from P2P.
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oik
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Post by oik on Nov 10, 2015 12:33:53 GMT
I just can't be bothered with these current accounts. Talking about what, £90 for a year worth of interest at 3% on £3k. Plus its variable % rate. Giving money to the big corporate banks is last on my list. I'd rather do Kiva. Not exactly. I currently have around £150k in my own and Mrs oik's current accounts, all paying between 3.00-5.00%, i.e around £5k pa. How long it stays there depends on how I see the wind blowing for other investment opportunities as, unlike most P2P, every pound is instantly accessible penalty free when I want it. (Then there are the various regular savings accounts paying similar rates if they float your boat.) Suggest you do some research. Nor is it giving money to the big banks as they're obviously loss-leaders, and the rate hasn't changed for any for years afaia. But obviously, if you prefer to tie up your cash for years to ensure a more comfortable lifestyle for the owners of P2P platforms, then that that sort of altruism is always heart-warming to behold. They'll be very grateful. That's not to say that, at the cost of some risk, there isn't money to be made on some P2P platforms, but the people out there placing money below the return from a current account plus an additional worthwhile risk premium probably need their money looked after by someone more sensible.
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oik
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Post by oik on Nov 8, 2015 12:46:02 GMT
A couple of so years ago Halifax tried to sell me a a current account upgrade (at the same time they were trying to sell me private banking), only to find that I wasn't eligible due to the lack of salary, benefit and pension payments. It may have been a good miss. Some of the "premium" current accounts have very specific income or investable asset requirements and I suspect it's that air of exclusivity that's the attraction for some. I've never seen much value in them for me and certainly not in what's now marketed as "private banking" with my own personal investment salesman. Usually not much in common with traditional private banking of old. Current accounts paying good interest are more attractive. There are plenty on offer and if one had turned me down I think I'd be checking out the others.
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oik
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Post by oik on Nov 6, 2015 18:39:24 GMT
Despite 6 figure savings, no debt, I got turned down on a couple for no income, wish I had your wife's charm! Some banks just ask for an income figure but not whether it's earned/pension or investment income. When I popped into a high street bank to open an account I was asked my total income: I asked whether they wanted dividend and crystalised or uncrystalised capital gains included because it varied each year and I hadn't a clue off the top of my head. I was told to just think of a number and that would be fine. So I assume it wasn't critical for them. Nor is having lots of other current accounts. I've never had an application queried but my understanding was they don't normally give a reason for refusing an application and their mechanisms are difficult to fathom. None of them require any minimum monthly pay in to come from income and, with only a couple of exeptions, don't object to just internal transfers between accounts with them. My RS strategy, such as it is, is not to lock into cash long-term and only use P2P when the return offers a decent premium over the no-risk alternatives for cash.
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oik
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Post by oik on Nov 4, 2015 10:55:41 GMT
Like the "small fee" for the Sell Out feature as described to new lenders, I increasingly get the impression that any transparency is in the sense of being able to look right through without seeing anything.
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oik
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Post by oik on Nov 1, 2015 11:19:00 GMT
Life was so much simpler when we only had green shield stamps to worry about.
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oik
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Post by oik on Oct 31, 2015 20:28:20 GMT
Looks like my card ran out in May. Maybe the Lloyds "sweetener" was only for one year then I'd have to pay £69.99 pa. I'll have to aslk them, because the card was issued by LLoyds with their logo on it. I got an email after 11 months saying I had a month to change my choice and otherwise the existing chioce would be renewed.
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