dandy
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Post by dandy on Jan 15, 2019 12:10:34 GMT
I think the sustainability of the PF is wholly dependent on the ability of the platform to continue topping it up because as things stand it does not appear to be self-sustainable (as you rightly infer). So it really depends how quickly they can get the risk/return parameters right, if at all. Pay-day lending is not as easy game - look at Wonga as an example and they had (effectively) unlimited funding. The Provision fund has reached sustainability in 2018. In which case I apologise. Congratulations. I had understood from previous posts that the PF was being maintained mainly by the platform.
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dandy
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Post by dandy on Jan 15, 2019 11:06:03 GMT
Seems like today's vote is clearly a NO but will be interesting to see how many would be needed to swing it to a YES in the next vote. I think that it will be a lot closer than is expected and after some more "compromises" from EU, it will ultimately get voted through as hard brexiteers will realise it is a choice between that or no brexit at all
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dandy
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Post by dandy on Jan 15, 2019 11:01:03 GMT
I like Welendus enough to have contributed to their equity raise on Seedrs, so certainty not trying to cause panic, but... I seem to be the only one that is concerned when I look at the statistics. I mentioned it a while ago in another thread without comment, so I'm obviously explaining myself badly, as usual. Either that or it's so blindingly obvious that I'm wrong that it doesn't merit a reply. Given the title of this thread, I'll give it one last go. The current stats for the 2018 cohort are: Actual Average Default Rate = 1.5% Target Average Default Rate = 10% Provision Fund Coverage = 123.5% On the face of it, all well and good. The Provision fund was more than sufficient to cover defaults. However, what concerns me is that it appears that the PF would have been totally inadequate had the Actual DR hit the Target DR. It looks to me that the PF would only have been sufficient to cover 18.5% of the losses ( 123.5 * 1.5 / 10 ). Given the lack of others concern, I'm fairly sure that I must have misunderstood something. I'd be grateful if someone could make me look stupid so that I can get a better nights sleep. I think the sustainability of the PF is wholly dependent on the ability of the platform to continue topping it up because as things stand it does not appear to be self-sustainable (as you rightly infer). So it really depends how quickly they can get the risk/return parameters right, if at all. Pay-day lending is not as easy game - look at Wonga as an example and they had (effectively) unlimited funding.
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dandy
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Post by dandy on Jan 14, 2019 10:33:12 GMT
Can they "force the borrower to sell the asset"? I don't believe they can here. All they can do is to take possession of the asset - via the courts. That takes time. Then Lendy themselves sell the asset. Or they put the borrower company into administration, and the administrator sells the asset. If there's a shortfall, then they need to take any personal guarantor to court for the money they owe. And that's assuming the borrower or guarantor doesn't take legal action to slow it all down. Lendy can immediately take legal possession of any property where the loan is in default by a) appointing LPA receivers over a fixed asset(s) or b) take over as mortgagee in possession themselves (rarely done to avoid any liability). Then they/LPA can sell the property subject to any leases/tenants if any. Of course there can be a dispute over whether a "default" has actually occurred which seems to be Lendy borrowers' main line of defence (or attack in one case). Court proceedings are only necessary if you wish to evict residential tenants. A totally separate course of action would be to put a company borrower into administrative receivership (much longer process and always involves court proceedings). This is typically only done where a shortfall is likely and the company has other assets too. So in short, Lendy ought to be able to appoint LPA Receiver over any loan in default "immediately". I am sure there are loan-specific reasons where they have not done so such as working with the borrower to get a better result all around.
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dandy
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Post by dandy on Jan 11, 2019 10:40:25 GMT
Cant see what the borrower could learn (even if they were sitting in Lendy offices) that is going to change anything. I think this is all massively over-hyped. The obvious outcome will be
1. No claim will ever be issued against any individual lenders 2. Possession of the property to Lendy – majority of legal fees payable by borrower - possibly covered by additional security paid into court. 3. The property will be sold. £5m - £7m - who knows. 4. Lenders will get back 70-90% of their investment. Probably within 12 months from now.
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dandy
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Post by dandy on Jan 10, 2019 16:33:24 GMT
I'm not surprised at all, nor are most on here, which is why I and many others are no longer investing in P2P and have been running down our Loans for some time now. But it takes years to get out completely doesn't it. Don't ever kid yerself that the P2PFA represents Lenders, it's obviously setup to support Borrowers, and we all are aware of The Useless & Ineffective FCA. P2P is totally rotten to the core, the writing has been on the wall and the omens there for nearly two years now. Good Luck to all, you know yer gonna need it! Stop beating round the bush ozboy tell us what you really think! The platforms that need to be avoided like the plague have always been abundantly obvious ... but there are many good platforms too! I think that 99%+ P2P investors have positive returns. Are you in +ve territory? Not quite as terrible as you suggest. Better than a kick in the lehmans
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dandy
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Post by dandy on Jan 10, 2019 14:12:04 GMT
The key difference is a technical one. Old rolling your money was only matched for a month and you could select to not relend it. Hence a very real risk there would be loans that needed funding (as already lent), but no one willing to lend today. The new rolling is matched for the loan term, and if you want to get out early you need to have someone willing to buy it off you. Subtle diff but makes a lot of diff if there is ever a cash shortage. So now its functioning like any investment (no guaranteed way to get out) With the monthly market you were guaranteed you repayment on a set date and with the exception of a resolution event you would get your funds on that date, with the Rolling market you need to request funds, wait for a buyer of your loans and only get the funds once sold. If there are no willing buyers you are stuck.
For me it is a significant change not a technical one. I am not sure the part in bold is correct. Resolution event is only relevant if there are PF issues - and is not invoked just because you cannot sell/withdraw. The monthly/rolling market is based on liquidity. What has changed is that now, after 30 days, RS do not re-match your money to someone else automatically unless you select RYI. So I think it IS a "technical" change because if there were liquidity issues under either system you would be unable to get your money out immediately. So the rolling market was not guaranteed before and it is not guaranteed now. It is essentially the same except you now need to actively ask to RYI and take a 14 day penalty.
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dandy
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Post by dandy on Jan 10, 2019 12:05:28 GMT
Under old RS as soon as PF was underfunded there would be a Resolution Event and essentially end of RS. This was a good way of keeping management's feet to the fire. It was not commercially sensible however. New RS is more commercially sensible. In such event (underfunded PF) who does it actually help to put the business into wind down, prohibit sales/new loans/new money etc etc? It makes far more sense to reduce interest payable and let the market find its new levels for new money (or not). I can understand why this is good for RS but bad for RS investors, once there is a lock in I believe RS is finished as very little new money will be invested and as RS is not making a profit sooner or later it will run out of funds to run the business. As far as I understand it is not just interest that RS will take from investors to fund the PF but capital as well.
Well if you check their latest filings beta.companieshouse.gov.uk/company/07075792/filing-history they seem to have raised a hefty chunk of money about a month ago. £14m or so! True about taking capital but that is only if interest were to fall to 0 first - by which point I agree it would be the end. However, if we are talking about a small cut to interest of 0.1%-1% then they could probably recover from that with a short term spike in rates to attract new capital. Essentially it gives them (limited) time to turn it around which i think is in everyone's interests. Better than BDO walking in the next day and providing an update 6 months later
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dandy
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Post by dandy on Jan 10, 2019 11:09:52 GMT
This is incorrect I am afraid. They used to do this, ie you could get your money back from Rolling and they potentially may not have had enough to repay it. It no longer functions like that. Arguably it didnt even work like short term vs long term before, because of the drag on withdraw you couldnt physiclaly get your money out before they would have been aware of a shortfall and hence not allowed the withdraw, and the T&Cs clearly said that you may not have been able to withdraw. I agree the changes to Rolling make it easier for RS to justify not paying back funds to investors as can be seen by delays in investors getting to their Rolling funds. However I cannot see what has materially changed in the event RS cannot repay monies to investors.
Under the old or the new rules investors would be locked in and unable to get their money except now RS directors will be able to take their salaries for a time (determined by themselves) using up investors capital and interest until they decide the company is no longer viable. Under old RS as soon as PF was underfunded there would be a Resolution Event and essentially end of RS. This was a good way of keeping management's feet to the fire. It was not commercially sensible however. New RS is more commercially sensible. In such event (underfunded PF) who does it actually help to put the business into wind down, prohibit sales/new loans/new money etc etc? It makes far more sense to reduce interest payable and let the market find its new levels for new money (or not).
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dandy
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Post by dandy on Jan 10, 2019 11:03:23 GMT
I think the choice of platform is fine. Crowdcube are older and bigger than Seedrs and have a bigger audience. If CC were so bad then the likes of Monzo and Revolut would not have used them. Ultimately there is only so much the platforms can do - they don't run the companies being promoted. Both are regulated by FCA so clearly have the same obligation to verify claims.
Also Seedrs charge 7.5% of any profit on sale. They do have a secondary market but it should really be called a 'cancellation policy' as all you can do is sell your shares at cost price (unless a new round with new valuation happens years down the line) - so not really a market that finds the real value of the shares being traded.
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dandy
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Post by dandy on Jan 9, 2019 15:31:32 GMT
So what happens if the actual gains are 10% per annum? Assume it is donated to charity Interested to know what regulation restricts capital gains to 5% per annum They have p2p permissions but not investment permissions so not sure how capital growth comes under those as normally youd only get interest. Its a weird structure.
However, given the current property market, 5%pa growth would be decent. More important, what happens if there is a decline in value, how does that work? Reading/watching to do later.
I agree that 5% CG p/a would be good - but not if the real CG is more. And as you say I thought the structure meant that legally we are lending and earning income with any CG converted to income via a special dividend on sale (or similar). A fee of about 5% to AE at the start is a bit of a wind up so must be an error.
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dandy
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Post by dandy on Jan 9, 2019 13:11:07 GMT
Well, the three days for a deposit appears to be less than 24hrs as mine has appeared.
So thats good, only problem is given all the other errors, currently uninvestable.
Edit - noticed this little disclaimer in the spiel
'Capital gains on this property are capped at 5% pa over the term of the investment under our regulatory permissions.'
So what happens if the actual gains are 10% per annum? Assume it is donated to charity Interested to know what regulation restricts capital gains to 5% per annum
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dandy
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Post by dandy on Jan 7, 2019 13:53:41 GMT
This is correct, but they all boil down to the same 2 issues.
If you want a deal you either:
- have a free trade deal (Norway style) which would also require free movement of people, or
- you have tariff free trading (Canada with as many ++++ as you like), which requires checks on good and would require a NI backstop
I can't for the life of me understand the issues with the Irish border. Switzerland borders 4 EU countries and appears to manage the transit of goods to and from the EU without checks or queues at the border. I don't see why we can't agree to something similar.
Free movement of people (I think) - probably much else too
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dandy
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Post by dandy on Jan 7, 2019 13:52:05 GMT
I am interested to hear what you think you know now that you did not know then. If you agree there is no right/wrong answer as things stand then by definition you agree that the public vote is still valid. A second referendum will give the same result again - something called British Pride means Remain will never win and those arguing for it are clearly so out of touch with reality that it beggars belief they are still in public office Um, well basically we now know the government's plan for Brexit. A biggy really. I doubt you do because even they dont. All you know is that the plan is to have a two year transition to negotiate anything and everything of any importance.
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dandy
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Post by dandy on Jan 7, 2019 13:35:57 GMT
I agree with this BUT this IS what happened! No it isn't. There was no published Brexit plan pre-referendum Do you not remember the lengthy pre-referendum debates? Yes Do you think anyone really knows any more today than they did then? Yes, far more If we really did, then Parliament would not be so split and would have come to a consensus by now. Doesn't follow. Knowing more doesn't mean everyone will agree. The fact that Parliament cannot come to a consensus is evidence in itself that there is no clear right or wrong answer. Agreed - it is a choice and that choice was made. Advice was given in the referendum, and implementing that advice has proved fiendishly hard, more so that was given credit for in the referendum debate ("easiest deal in human history", "we hold all the cards", etc etc). There are still several options with hugely different benefits/costs that the people haven't been asked their opinion on (Norway +, TM's deal, Swiss model, Canada+++, no deal/WTO) etc. I am interested to hear what you think you know now that you did not know then. If you agree there is no right/wrong answer as things stand then by definition you agree that the public vote is still valid. A second referendum will give the same result again - something called British Pride means Remain will never win and those arguing for it are clearly so out of touch with reality that it beggars belief they are still in public office
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