bigfoot12
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Post by bigfoot12 on Nov 20, 2013 10:37:03 GMT
IIRC I have read somewhere that you recently made a profit. My guess is that your backers still need significant growth before they are happy (are such people every satisfied we can leave for another day). How much bigger to RS have to get so that the return on equity is sustainable and satisfactory for your investors?
How much of a cost burden will the proposed FCA regulations impose? (Will you need additional staff? Is the capital requirement significant?) There is a suggestion that one of the other (not Zopa or RS) p2p lenders will increase lender fees to meet the capital requirement.
I assume that regulation (if it isn't too expensive) will increase your attractiveness to lenders more so than borrowers. Do you have any sense of whether or not this will enable you to grow more quickly? (At the moment are you more constrained by the availability of lenders or borrowers?)
About the time that regulation is likely to start funding for lending might be ending. Do you think that this might be more significant?
I understand that you have to be careful what you say, but rough order of magnitude answers would be most interesting.
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jimbo
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Post by jimbo on Nov 20, 2013 11:06:51 GMT
I second bigfoot12's question...  |
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Post by westonkevRS on Nov 20, 2013 21:07:26 GMT
Jimbo and Bigfoot,
We (@ RateSetter) think the regulation is very sensible and will be happy to meet the minimum requirements. As a matter of fact we are already virtually compliant and the capital requirements are not an issue.
As part of the P2P Association we already had in place a plan to manage the loans in the very unlikely event of company failure, and we had already chosen to do this by holding segregated capital that is in line (actually surpassing) with the regulatory minimum. Other members have chosen to pay a form of insurance payments, but we always thought that ring-fencing some capital was a more effective choice. And as you probably know from June 2013's fund raising we have a lot of capital at the moment. The capital we hold is actually more than the regulatory requirements, so really the higher the FCA set this the better for RateSetter as a barrier to entry. I can't state the amount we hold, although we did release this data to the BIS as part of the governments future "funding for lending" scheme. We certainly don't need to increase borrower rates or fees due to regulation, as our costs haven't been impacted.
We won't need to recruit any more staff specifically because of the regulation, we are hiring because of our growth rate and ambitions.
Kevin (RateSetter CRO and P2P lender).
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Post by westonkevRS on Nov 20, 2013 21:14:51 GMT
In terms of attractiveness to lenders, absolutely. This will make is assesible to a whole new segment of society that are too risk adverse to lend with a non FCA regulated firm. And who can blame them, there are a lot of scary stories (e.g. boiler room scams) out there. In fact we saw an increase in lending when the new regulations were announced, there's not really a need to wait for a starting gun. That said, this coincided with Martin Lewis's positive article, so sometimes it is hard to know why lending increases, aside from rates.
The above is emotional, there are other more practical reasons lending will increase. Regulation will open the doors to new sales channel's and products such as ISAs abd SIPPs one day....
But as you might have seen from giffgaff deal, we have many plans to meet this increased lender demand with more borrower demand. Hopefully we can keep rates attractive to everyone. And of course you can always be a "ratesetter"... :-)
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oldgrumpy
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Post by oldgrumpy on Nov 20, 2013 21:54:57 GMT
"Hopefully we can keep rates attractive to everyone. And of course you can always be a "ratesetter"... :-) "I am a ratesetter. I shall remain a ratesetter .... as long as Ratesetter allows me to set my own rate. Zomeone elze doezn't let me anymore. Zo I am leaving them. I like setting my own rates. FC is OK, despite some of its weaknesses, but Assetz is a different model for different kinds of loans, and I like that too. Bring on the regulation, but bring on sensible tax treatment for losses in our business lending. But that's another story. Incidentally I had a phone call from a Ratesetter employee regarding a quirk in my account and ...... oooooooh, she didn't arf sound nice......  No it wasn't Rhydian!!
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Post by westonkevRS on Nov 20, 2013 22:09:53 GMT
Did she sound like a Lucy or a Steph, they are the two ladies in the team....and they are both lovely! Best customer services team in financial services.....
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oldgrumpy
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Post by oldgrumpy on Nov 20, 2013 22:17:42 GMT
You really think I'm going to embarrass her on this forum? Take your pick - you have a 50% chance of success. Mmmm 50%. That's a good rate. How about it Kev? I'll lend for phones at 50%!  |
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bigfoot12
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Post by bigfoot12 on Nov 21, 2013 9:42:35 GMT
Kevin, thank you for your response. It is interesting (and pleasing) to hear that the regulation shouldn't add any significant costs to you.
I am a ratesetter, and I like the fact that it is a market, rather than a centrally controlled system. Having said that, I have dipped my toe into FC and I find that it is too time consuming for me. (I might revise that view when they release their API.)
You started off with a good model (for retail loans) and long may it continue.
Do you think that the ending of funding for lending will make it easier for you to compete? Can you apply for funding for lending? I thought some non-bank institutions could, if half of every loan came from the BoE at below 1% that would bring the average rate down.
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bugs4me
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Post by bugs4me on Nov 21, 2013 12:54:04 GMT
Going OT but going to high-jack the subject as Kevin is around.
Are there any plans for Ratesetter to have their own dedicated forum as their popularity is picking up by the minute - or so it seems to me.
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Post by westonkevRS on Nov 21, 2013 18:22:16 GMT
Bugs4me,
There are no plans for a forum. I think as the RS offering is very open and transparant there wouldn't be much to talk about. The more boring we are the better. We just want to focus on the work and make sure we can offer both lenders and borrowers a good deal. Spending time, effort and money on a forum will only add costs to be borne somewhere in the margin.
If you read the stuff on other forums and here, there is a lot of moaning, complaining and trying to second guess processes. If RateSetter customers ever end up asking us such questions, then we've failed
I'm a geek for P2P stuff anyway so I've always hung around the forums. We (RateSetter) thought there would be no harm in me answering any questions and providing reassurance when needed. But as a hobby rather than during work.
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Post by westonkevRS on Nov 21, 2013 18:30:10 GMT
BigFoot,
I like the RateSetter model and that's one reason I joined. The founders had the chance to evaluate the initial P2P models which were superbly innovative at the time, and make it (in my opinion) better. The lender takes risk model was a bit geeky enjoyed by risk people such as myself, but was never going to go high street mainstream - or commercially viable. This is orobably why now others have copied into a hybrid thing. Immitaion is the sincerest form if flattery.
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Post by westonkevRS on Nov 21, 2013 19:37:06 GMT
Bigfoot,
We are in the process for applying to participate in BIS's funding scheme. RateSetter didn't last time and that was probably a mistake. They didn't apply as it wasn't a priority but commercial considerations aside it is a good stamp of approval and useful for marketing. So this time is felt appropriate.
So we are in the process of applying which includes a period of BIS due diligence. Something our individual lenders do to a degree, just formally with vigour.Hopefully if we are approved this will provide our lenders with confidence in RateSetter as well.
That said the overall £ numbers in consideration are not hugely material. Let's just say the equivalent of a week or two of normal lender deposits.
The reference to low interest rates from BoE or treasury is a little misleading. This might be the cost of the money to BIS but they'll be lending just like our normal lenders. The only difference is they'll be a little subjective in the type of lending. Which I'll elaborate nearer the time. But essentially they'll be getting the same returns as a normal individual lender.
And this is a key point. The size or importance of any lender (now or in the future) will not give them priority or preference. Any of our individual lenders with just £10 can always rate-set and decide their competitive position and jump the lending queue. This equality is a fundamental principle that we will always do our best to adhere to in spirit.
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Post by yorkshireman on Nov 21, 2013 20:38:06 GMT
I don’t understand why some investors are almost orgasmic in their praise of Ratesetter when rates for monthly access can only be described as cr*p.
1.2% this evening 21/11/13 is risible, you can get far better instant access rates with several high street banks and building societies whilst 1, 3 and 5 year rates are unattractive IMHO.
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oldgrumpy
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Post by oldgrumpy on Nov 21, 2013 21:05:52 GMT
Maybe Ratesetter rates are low at present because of excess incoming funds hæmorrhaging from another platform which is doing itz utmozt to be the Tezco of P2P. (Supermarkets force the farmer's prices down to the bare bone in order to be the cheapest retail seller - unfortunately most of the farmers are helpless to prevent it). The difference is that Zoepurr forcing the lenders to accept lower and lower returns will backfire. The lender can pull out at a stroke, while the farmer can't).
But... Ratesetter lenders still set their own rates and for a while will undercut to rates a bit higher than Zoaper imposes. This effect may change in due course ... or Ratesetter lenders will do as I have temporarily done - withdraw repayments to invest in the likes of FC and Assetz and FK, and go back into Ratesetter when the 5year rate goes back up to 5.6%-5.8+%. One month and one year rates have never been attractive and seem to me to be a place for temporary placing of cash.
But what's this BIS thing? Too much funding means lower rates ... doesn't it?
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Post by westonkevRS on Nov 21, 2013 22:00:25 GMT
Monthly access rates are lower than average at the moment, but they usually hit 1.8 to 2.0% at some point in the week.
The 5-year money is now at 5.3%, and if you rate-set you'd probably get matched at 5.5%. IMHO I think this is the safest best rates on the market at the moment. There are some other P2P sites with higher rates, but there are larger organisational risks here I thinks. If you know a more attractive rate, let me know and I'll put my own cash there. But not equities or risk of loss, remember "every lender, every penny".
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