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Post by shyinvestor on Dec 23, 2017 11:21:43 GMT
Why do most p2p platforms keep the identity of their borrowers a secret? Looking at a selection of p2p platforms, I found that 12 out of 17 kept borrower identities secret while the other 5 platforms openly displayed the names of private borrowers and companies alike.
Knowledge about the borrower is clearly very useful to an investor. There are some individual borrowers who should be avoided at all costs. Likewise certain companies who have a less than spotless reputation.
What is the down side of revealing a borrower’s identity? As long as they do not have a poor reputation in their financial dealings, I see no need to be so coy about borrowing in this way. Borrowing money from a bank to fund business expansion or taking out a mortgage to buy a house has been an acceptable way to progress for a very long time. Why should borrowing from a p2p lender be any different?
Openness is surely the way to go. If investors have more confidence in borrowers, then surely the p2p platforms will benefit from quicker take up of loans for reputable people/companies. A poor response from investors might trigger second thoughts about the prudence of the lender to the borrower.
Clearly there are many other factors which investors take into account when deciding to invest in a loan, but the probity of the borrower should be one of them.
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david42
Member of DD Central
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Post by david42 on Dec 23, 2017 12:37:49 GMT
If you were borrowing money would you want your identity broadcast for everyone to see, including your competitors? Many borrowers might consider the publication of the loan details to be one of the bigger downsides of peer to peer borrowing.
When you get a loan from a bank the details are confidential between you and the bank.
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Post by mrclondon on Dec 23, 2017 12:55:02 GMT
When you get a loan from a bank the details are confidential between you and the bank. If a bank provides a secured loan, whilst the amount of the loan may be confidential its existence isn't. There is a public domain record at the land registry that I have a loan from HSBC secured on my residential property. If the loan is to a company there will be records of the charges both those against the specific asset and any debenture at companies house, again in the public domain. It is possible to identify the borrowers of almost all p2p secured loans with relative ease a few weeks after they are written from CH and LR records (the latter at £3 a pop). Even before loans are written many borrowers can be identified from the records held by the relevant council's planning department, or from LR records.
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Post by munchydave on Dec 23, 2017 12:57:21 GMT
If you were borrowing money would you want your identity broadcast for everyone to see, including your competitors? Many borrowers might consider the publication of the loan details to be one of the bigger downsides of peer to peer borrowing. When you get a loan from a bank the details are confidential between you and the bank. I have no problems with keeping the name etc of any borrower confidential. If that is so then we have to rely totally on the information given by those who run the web site and be confident that they will not take on loans that are not secure for any reason. A secured loan on for example property should almost never fail if valuations are accurate and LTV's are such that capital can always be recovered in the event of a default. This is not the case on many platforms recently. Please do not respond with the usual " your capital is at risk " we know that but there is a difference between at risk anyd throwing your money at a deal which anyone can see is going to fail if the full facts are known.
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Post by mrclondon on Dec 23, 2017 13:14:28 GMT
What is the down side of revealing a borrower’s identity? As one platform put it very succinctly to me a few months ago "they have a duty of care to all stakeholders including lenders, borrowers, platform shareholders, investors and employees" Platforms need to write a certain volume of new loans every year to be profitable, and there are too many platforms chasing too few "good" loans. By making it difficult to understand the background to a particular loan the platform presumably believes that they stand a better chance of getting the loan filled and hence of the loan making a contribution to the platform's profits. I think the point some platforms overlook, is that whilst in their initial stages of growth they can rely on retail lenders seduced by 10-13%, in many cases investing blindly, the platform eventually reaches the point that they need larger sums from more professional investors who simply won't invest in a loan without doing their own detailed due dilligence on the asset, borrower and indeed platform. Unfortunately in every case where platforms have engaged in reckless lending early in their life, it has come back to bite them in due course. Since I penned a similiar plea a few months ago, there have been some tentative signs that MT and COL realise more openness is required. That said MT's recent West London loan disclosed the identity of the operating company but not the freehold owner other than stating common ownership, leading lenders to believe (mistakenly) that MT were covering up the use of an offshore tax haven by the borrower. DD Central is slowly building into a comprehensive repository of facts about p2p loans and borrowers particularly those on MT/L/COL/FS/ABL.
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Post by mrclondon on Dec 23, 2017 14:11:57 GMT
... I think the point some platforms overlook, is that whilst in their initial stages of growth they can rely on retail lenders seduced by 10-13%, in many cases investing blindly, the platform eventually reaches the point that they need larger sums from more professional investors who simply won't invest in a loan without doing their own detailed due dilligence on the asset, borrower and indeed platform. Unfortunately in every case where platforms have engaged in reckless lending early in their life, it has come back to bite them in due course. (my bold) bit hash for you mrc  plus given the range of rates, sounds like you’re specifically excluding CO with it’s up to 15% loans.  I did think about typing 10-15% but didn't because I see COL's 14% and 15% plus cashback as a pricing to liquidity to encourage additional participation in a loan. Similiar to the bonus rates offered by FS on top of the 10-13% risk priced yield. Taking COL as the example for now, the rate is irrelevant to me when fundamental questions regarding the loan proposition go unanswered (e.g. to questions raised concerning the Chesterfield TL Head of Terms document. COL could offer 25% on that loan, and I still wouldn't be interested.)
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duck
Member of DD Central
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Post by duck on Dec 23, 2017 14:47:01 GMT
..... It is possible to identify the borrowers of almost all p2p secured loans with relative ease a few weeks after they are written from CH and LR records (the latter at £3 a pop). Even before loans are written many borrowers can be identified from the records held by the relevant council's planning department, or from LR records. Agree 100% a little digging and you can usually find the information that you require. That said I've often wondered if Companies House and Councils actually gather data on Companies/Individuals 'visited' and if so what is done with that data. I spend hours on CH (probably one of my most visited web sites) often checking on the same individuals or tracing links that end back in the same place. As for Council planning sites, if they do gather data, they must be slightly bemused at the number of downloads they have of documents for certain developments. This might not be noticeable in the large cities but when you head into say the wilds of Wales ......
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Post by munchydave on Dec 23, 2017 14:57:22 GMT
(my bold) bit hash for you mrc plus given the range of rates, sounds like you’re specifically excluding CO with it’s up to 15% loans. I did think about typing 10-15% but didn't because I see COL's 14% and 15% plus cashback as a pricing to liquidity to encourage additional participation in a loan. Similiar to the bonus rates offered by FS on top of the 10-13% risk priced yield. Taking COL as the example for now, the rate is irrelevant to me when fundamental questions regarding the loan proposition go unanswered (e.g. to questions raised concerning the Chesterfield TL Head of Terms document. COL could offer 25% on that loan, and I still wouldn't be interested.) That's what it boils down to. You can offer the moon and the sun in interest rates but when it defaults the rate is ZERO or less than zero. I want a deal that gives a good chance that I will at least not loose my capital. If the valuation is accurate then short of a massive downturn in the property market your money should be safe. There has been no such downturn therefore no one should be loosing money on any property loans. BUT THEY ARE, so all P2P lenders watch it. It will not take much longer for even the investors that never see this site work it out for themselves.
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Post by p2player on Dec 24, 2017 12:29:50 GMT
This is precisely why I laugh at people who have the ludicrous, poorly thought out audacity to claim that P2P is less risky than the stockmarket. As you say. When P2P defaults, there is a significant and very real risk that you are likely to loose a substantial part, if not all of your principal. The whole default handling process (and thus the loss you eventually suffer) is entirely out of your hands. In the stockmarket on the other hand, is except in extraordinary circumstances (or illiquid nano-caps) you will almost always be able to get out at a controlled loss level if a company has a “bad news day” and you decide you are not going to sit it out. Unless you’ve got your head in the sand, anyone should be able to get out of a stock at max 20% loss, and even that figure is when the stock has gapped down at the open and you’ve been late to pick up on the news and late to make a decision. The trouble is that as already has been pointed out on this thread, gullible retail investors just get sucked in by the high headline rates of return. Forgetting that P2P is still a young, poorly regulated sector with a variety of conflicts of interest, that has little transparency and has yet to go through a full lifecycle.
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plus given the range of rates, sounds like you’re specifically excluding CO with it’s up to 15% loans. 
