I have been dipping my toe since late May, and at the moment keeping £100 uncommitted ready to pounce. I had my first 26p interest last week, and committed my £100 to the new loan today, so I wanted to deposit £99.71 to make my balance up to £100 - OK can't do that as minimum deposit is £100, so I deposited £199.71. Went to enter the amount on the platform only to find it will not accept pence so I lied and said I have deposited £200.
All the other sites I use allow deposits to include pence.
Edit: One solution would be to round up interest payments to the nearest £1
Hi n. Thank you for bringing this to our attention. We're adding the possibility to input pence and it will be available later this week.
I'm reasonably confident, but happy to be corrected, that these are the same permissions as for other platforms. Given that for instance FS have full authorisation, and also pay pre-drawdown interest, it seems that it is possible.
Even if you prefer not to elucidate it publicly, I would hope that you understand why it is that your competitors are able to offer a more equitable service than you. Perhaps you could seek some clarification from the FCA?
Hi reeknralf. It may be possible, but not something that we considered when we applied for our relevant permissions. It would require a significant cost and time undertaking to change our business model and/or regulatory permission(s) and not something that we are prepared to do at this point of time.
Our Terms and Conditions set out what lenders may expect when registering and investing on our lending platform.
We are unable to pay interest before draw down given our business model. If we would, we would effectively be a bank and in breach of our regulatory permissions. I understand that there are some complexities with our model (no-prefunding, no interest until a loan is complete, borrowers may at any time withdraw their listing etc.), but it is the according to Article 36H of the Regulated Activities Order and our regulatory permissions.
Do I understand correctly that you operating under a different regulatory regime to those platforms who pay pre-drawdown interest?
I cannot really comment on what permission(s) other platforms operate under, but our understanding is that we cannot use own funds to pay interest on any uninvested funds. Our regulatory permission is to "Operating an electronic system in relation to lending", as set out in Article 36H of the RAO.
Last Edit: Jul 19, 2017 11:32:37 GMT by filipkaradaghi: Updated the relevant permission
I appreciate that borrowers can be fickle, and that this is part of lending. However, the platform is in a much better position to ascertain this risk than the lenders. We have absolutely no insight into how far legals have progressed, or what it will cost the borrower to withdraw at any given stage. Apparently not very far, and not very much in the case of this loan.
Because investors are not in a position to quantify the risk of a loan being cancelled, most platforms pay interest from the point funds are committed. In effect the platform spreads the risk of individual loans being cancelled across all loans. So instead of offering loans at x% from drawdown, you offer a lower rate from the point funds are invested.
Hi reeknralf. The legals for this loan have been ongoing for around a week and the borrower has paid for two valuation reports. We do have an Q&A section for each loan where lenders may ask any questions related to the loan or the borrower.
We are unable to pay interest before draw down given our business model. If we would, we would effectively be a bank and in breach of our regulatory permissions. I understand that there are some complexities with our model (no-prefunding, no interest until a loan is complete, borrowers may at any time withdraw their listing etc.), but it is the according to Article 36H of the Regulated Activities Order and our regulatory permissions. We are doing our best to make this as clear as possible to avoid surprises or disappointments and do welcome suggestions on how to improve it.
A 2% reduction in a 17% loan is about a 12% reduction in the rate
Were as a 3% reduction in a 78% LTV loan is only about a 4% reduction in LTV
So the rate was reduced by about 3 times that of the LTV
A reduction in risk is normal to reduce the rate, but should be compensatory and fair. It was a big jump for very little reduction in risk
As much as you have adjusted the fees in compensation for the extra time you needed to spend on the loan, we get no such compensation for time and interest lost in reassessing a loan
Yes, relisting is preferred to delisting, but offer us a similar deal
Fair point. Our initial servicing fee for the loan was very low (0.1% on an annual basis) and we will consider it better the next time, keeping in mind that a re-listing might occur. Thank you for the feedback.
Post by filipkaradaghi on Jul 19, 2017 10:34:05 GMT
I can understand that it is frustrating when a loan gets de-listed, especially as time and effort has been spent on assessing a loan and transferring funds.
It is the first time that we have done this (we have withdrawn a loan listing previously, without re-listing it), and did have little choice as the borrower requested a reduced loan amount. The alternative would be to delist the loan entirely.
Based on the borrower’s request, we re-assessed the loan and assigned it a higher risk rating and a lower rate, reflecting what we assessed to be a lower risk given the lower loan amount and LTV (reduced from 78.1% to 75% on a gross basis). The pricing is what we believe to be in line with the market and based on our credit policy. We did increase the borrower servicing fee to compensate for the lower arrangement fee due (subject to full finding and loan acceptance by the borrower) considering the additional efforts we had to spend on this loan.
Given the reactions and feedback, we might have to reconsider this approach going forward, keeping in mind that the only other option in a similar situation would be to withdraw the listing entirely.
Please let me know what your preferences would be in this situation.
Thank you, it would not be possible without your help and input.
Hi Filip LLI is doing well. What are the plans on loans renewing when they mature?
Thank you, rs. We will consider a loan extension on a case by case basis. Any loan extension could mean that we would re-list the loan listing, depending on discussions with the borrower(s), the security property(ies) and other.