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Post by stuartassetzcapital on Dec 31, 2017 14:20:21 GMT
I like AC for its ease of use and professional approach. Unfortunately, like many others I am withdrawing funds as the rates have dropped significantly with no apparent change in the risk profile. I assume it is AC making a bigger margin. I am not sure it's AC making a bigger margin, the market is more competitive now with a wider choice of platform for borrowers. AC are no doubt offering borrowers rates such that they borrow with AC and not elsewhere for a cheaper rate. This reduction in rates is happening on other platforms e.g. COL (bling) and UB. It is true that we don’t make an enhanced margin on loans within the investment accounts - all the excess margin beyond our typical 0.9% servicing fee (i.e. the manual lending rate minus the investment account rate)goes into the account’s provision fund for protection of investors. Of course if that isnt used then it may come back to us eventually but we have no expectation of any returning any time soon/ ever as our accounts and hence their PF requirements continue to grow. I hope this helps.
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Post by stuartassetzcapital on Dec 31, 2017 14:24:28 GMT
Congratulations  I hope it will work for you. Yes, it is tricky to operate it on the phone. Ipad works fine. phone is a mare We have a new investor dashboard out in February and phone use should be a lot better.
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Post by stuartassetzcapital on Dec 31, 2017 14:34:24 GMT
Thanks to a lack of diversification a substantial amount of my money was locked into bad loans almost immediately after investing in ACs 'black box' accounts. I think that it is appalling that individual investors are overexposed in these accounts: losses in these accounts should be equally shared across all investors not levied against individuals who had no choice within which loans AC invests their money. I had no choice in the selection of these loans, was fed a lie that investments were diversified and protected by the reassurance of a 'provision fund' which in my experience AC do not use, preferring to lock in lenders funds indefinitely without interest paid. AC are apparently quick to suspend loans but are not very good at managing those suspensions or providing updates to lenders. For months I have been fed a series of updates, usually along the lines of 'meeting with the borrower was cancelled or we met the borrower and nothings changed, we'll provide further update next month'. Asking questions of AC just gets a referral to the latest non-update. I have to question AC's due diligence in setting up loans which within a matter of weeks they suspended indefinitely. I have pulled out everything I can from AC and certainly would never recommend them. Hi, just to address your points, all expected losses within the automated investment accounts (eg QAA,30DAA, GBBA, PSA, GEA), post completion of any recovery action, are well covered by the provision funds’ existing cash balances. Equally yes the loans are locked for trading until recovered or until a suspension event is cleared. The diversification is close to or better than the targeted diversification in most account’s cases and the new algorithm in February will permanently improve this going forwards also. It is true there is no choice on the loans in these accounts as investment is not managed but automatic according to the mandate for that account. I think you may find different views nowadays on our recovery skills and results, now that we have completed several and with predominantly good to excellent results. I would really endorse our recovery skills as a strong relative strength in the industry. I don’t think you will find many, if any, loans that are suspended for any material period or at all shortly after launch. It is true we are a bit trigger happy on loan suspensions versus many platforms but you will probably find this is due to wanting to treat customers fairly and ensure people know there may be an upcoming issue on a loan rather than let people freely trade oblivious to known issues which I’m sure people would be most unhappy about. It’s a fine balance but the right approach we feel. I hope this helps any readers and would welcome people’s agreement or otherwise on my comments. Many thanks.
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Post by stuartassetzcapital on Dec 31, 2017 14:39:55 GMT
In context of defaults, losses and recoveries and their overall effect on net pre-tax returns it may be useful for people to read this independent analysis - c 27% return net of all actual or anticipated losses over the last 3 years. Altfi Data are independent and carry out intricate loan by loan cashflow analysis of our loan book (as well as anyone else who is brave enough to expose their entire loan cashflow data) to produce their own results, not ours. We are currently at the top of this table which is nice to see versus companies like Funding Circle, Ratesetter, Zopa, MarketInvoice etc. AltFi Data
I hope this also helps. |
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teddy
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Post by teddy on Dec 31, 2017 14:42:46 GMT
Stuart, do you have any comment on the non existent use of the provision fund to repay lenders when loans go bad for months on end? Surely, capital and interest repayments can be given to lenders out of the PF as per the repayment schedule, and any money reclaimed from the recovery process can be put back in the PF.
It's really very bad form to advertise a provision fund and then actively refuse to use it.
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Post by stuartassetzcapital on Dec 31, 2017 15:06:50 GMT
Stuart, do you have any comment on the non existent use of the provision fund to repay lenders when loans go bad for months on end? Surely, capital and interest repayments can be given to lenders out of the PF as per the repayment schedule, and any money reclaimed from the recovery process can be put back in the PF. It's really very bad form to advertise a provision fund and then actively refuse to use it. Hi, yes, happy to comment. We have a discretionary (rather than automatic) provision fund for regulatory reasons but nonetheless all potential losses to date are covered by the funds held in cash in the respective account’s PF. We expect them all to have payouts on defaulted loans sanctioned at present (and have no reason to think otherwise for the future either) but it takes time to know the level of claim that we will need to fund from the PF as we are secured and we expect to get most if not all cash back on loans but it takes time for a secured recovery. Interest for investors continues to accrue during the recovery period of course and if there is enough cash from the recovery then this will also be paid. The PF software functionality has been a little lacking until about now and for that I and chris apologise but it is a ‘how exactly are you paid and when’ thing rather than a ‘we don’t/won’t want to pay you’ thing that has been created from some original system design limitations. I understand this is about to have a software upgrade (any day now) and interest will then be able to be paid current to investors on defaulted loans with any final calculated capital losses also covered (subject to PF cash reserves but as stated previously all known and expected losses are currently more than fully covered). I hope this helps bring clarity and it has taken us longer than it should have done to address this issue for investor interest payments on defaulted loans and for that we apologise.
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teddy
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Post by teddy on Dec 31, 2017 18:15:39 GMT
Taking the S**** D**** loan, which has been in default for some time now, as an example, combined with what you've said about the forthcoming functionality upgrades to the PF, and the what are sure to be very protracted legal proceedings, would you expect that the post upgrade PF now doles out repayments as soon as possible to lenders, or will you be waiting for the outcome of legal proceedings?
I believe I'm somewhere between £200 and £250 in the hole for the above loan, so not a huge amount, but every little bit helps in terms of getting my little furry mitts on the interest and loan repayments.
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Post by stuartassetzcapital on Dec 31, 2017 19:15:11 GMT
Hi, our PF isn’t funded in a way presently that would cover full repayment of capital shortly after a loan defaults and prior to recovery in the same way that say a large unsecured lending platform may do presently. Equally we are not generally looking at material capital losses on loans given the security cover unless there is a serious question over the veracity of the original valuation and even then we may have a claim on the valuer. So yes it will take some time to recover capital and no we don’t currently plan to repay all capital on a loan at point of default. A theroetical example may explain the reason - we may have average expected losses across all loans in an automated investment account at say 0.5% of the book. Say the book is c £100m in that account. So the likely losses are c £500k on that account over time. However if the average loan is say £500k and we had at present say 5% of the book in default that would mean we are being asked to pay out £5m in advance of recoveries instead of the likely £500k loss on the entire book. We do not fund our PF in that way and as we are a P2P lender not a principal lender we cannot legitimately take the loan directly on our books as some could/ have in order to buy it off lenders and pay them back all their capital. We do however plan to start paying interest on a current monthly basis on loans that qualify and the updated systems to achieve this will be explained shortly in an email bulletin to investors. On that basis the time taken to recover a defaulted loan will be less important to investors we trust and also the fact we have an average LTV on the loan book of c 60% should give comfort that the PF will not be needed often on defaulted loans either. I hope that this mostly answers your questions.
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teddy
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Post by teddy on Dec 31, 2017 19:44:33 GMT
Equally we are not generally looking at material capital losses on loans given the security cover unless there is a serious question over the veracity of the original valuation and even then we may have a claim on the valuer. This is exactly the situation with the S**** D**** loan mentioned in my earlier post, and why I expect legal proceedings to be protracted. This was all put in the AC email sent to lenders a few months ago.
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jonah
Member of DD Central
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Post by jonah on Dec 31, 2017 21:41:04 GMT
Hi, our PF isn’t funded in a way presently that would cover full repayment of capital shortly after a loan defaults and prior to recovery in the same way that say a large unsecured lending platform may do presently. Equally we are not generally looking at material capital losses on loans given the security cover unless there is a serious question over the veracity of the original valuation and even then we may have a claim on the valuer. So yes it will take some time to recover capital and no we don’t currently plan to repay all capital on a loan at point of default. A theroetical example may explain the reason - we may have average expected losses across all loans in an automated investment account at say 0.5% of the book. Say the book is c £100m in that account. So the likely losses are c £500k on that account over time. However if the average loan is say £500k and we had at present say 5% of the book in default that would mean we are being asked to pay out £5m in advance of recoveries instead of the likely £500k loss on the entire book. We do not fund our PF in that way and as we are a P2P lender not a principal lender we cannot legitimately take the loan directly on our books as some could/ have in order to buy it off lenders and pay them back all their capital. We do however plan to start paying interest on a current monthly basis on loans that qualify and the updated systems to achieve this will be explained shortly in an email bulletin to investors. On that basis the time taken to recover a defaulted loan will be less important to investors we trust and also the fact we have an average LTV on the loan book of c 60% should give comfort that the PF will not be needed often on defaulted loans either. I hope that this mostly answers your questions. Hi Stuart, please could you explain your comments highlighted in blue above to help with a wider understanding and specifically how does a loan "...qualify..." for inclusion? Additionally for loans that do meet your qualification criteria what interest rate will be paid is it a) Headline Loan rate, b) Headline Loan rate plus a default interest rate, c) Default interest rate Only? Thank you, J. Sadly packaged accounts don’t get default interest. So it will be d) the rate on the account, eg 7% or 6.25% etc. That said, getting monthly interest on all loans* in GBBA etc is a positive step forward. *subject to agreements, no guaranteed, not insurance. I assume this would NOT apply to loans which were rolled up interest normally such as F*** C** 3? Even if it went into default (which it hasn’t , just using it as a hypothetical example) I’m guessing no PF interest until recovery. Really looking forward to more details.
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zlb
Member of DD Central
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Post by zlb on Jan 2, 2018 9:23:29 GMT
Ipad works fine. phone is a mare We have a new investor dashboard out in February and phone use should be a lot better. great. Are you able to say what the diversification will look like in terms of %? Would you advise that someone transfers/lends smaller amounts at a time in the relevant accounts? Will a holding account be used for the isa? Thanks.
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ashtondav
Member of DD Central
Posts: 1,814
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Post by ashtondav on Jan 2, 2018 9:49:51 GMT
Hi, our PF isn’t funded in a way presently that would cover full repayment of capital shortly after a loan defaults and prior to recovery in the same way that say a large unsecured lending platform may do presently. Equally we are not generally looking at material capital losses on loans given the security cover unless there is a serious question over the veracity of the original valuation and even then we may have a claim on the valuer. So yes it will take some time to recover capital and no we don’t currently plan to repay all capital on a loan at point of default. A theroetical example may explain the reason - we may have average expected losses across all loans in an automated investment account at say 0.5% of the book. Say the book is c £100m in that account. So the likely losses are c £500k on that account over time. However if the average loan is say £500k and we had at present say 5% of the book in default that would mean we are being asked to pay out £5m in advance of recoveries instead of the likely £500k loss on the entire book. We do not fund our PF in that way and as we are a P2P lender not a principal lender we cannot legitimately take the loan directly on our books as some could/ have in order to buy it off lenders and pay them back all their capital. We do however plan to start paying interest on a current monthly basis on loans that qualify and the updated systems to achieve this will be explained shortly in an email bulletin to investors. On that basis the time taken to recover a defaulted loan will be less important to investors we trust and also the fact we have an average LTV on the loan book of c 60% should give comfort that the PF will not be needed often on defaulted loans either. I hope that this mostly answers your questions. A small point, but please could you use paragraphs as they do help comprehension. Thanks.
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Post by bikeman on Jan 10, 2018 21:40:09 GMT
Thanks to a lack of diversification a substantial amount of my money was locked into bad loans almost immediately after investing in ACs 'black box' accounts. I think that it is appalling that individual investors are overexposed in these accounts: losses in these accounts should be equally shared across all investors not levied against individuals who had no choice within which loans AC invests their money. I had no choice in the selection of these loans, was fed a lie that investments were diversified and protected by the reassurance of a 'provision fund' which in my experience AC do not use, preferring to lock in lenders funds indefinitely without interest paid. AC are apparently quick to suspend loans but are not very good at managing those suspensions or providing updates to lenders. For months I have been fed a series of updates, usually along the lines of 'meeting with the borrower was cancelled or we met the borrower and nothings changed, we'll provide further update next month'. Asking questions of AC just gets a referral to the latest non-update. I have to question AC's due diligence in setting up loans which within a matter of weeks they suspended indefinitely. I have pulled out everything I can from AC and certainly would never recommend them. Hi, just to address your points, all expected losses within the automated investment accounts (eg QAA,30DAA, GBBA, PSA, GEA), post completion of any recovery action, are well covered by the provision funds’ existing cash balances. Equally yes the loans are locked for trading until recovered or until a suspension event is cleared. The diversification is close to or better than the targeted diversification in most account’s cases and the new algorithm in February will permanently improve this going forwards also. It is true there is no choice on the loans in these accounts as investment is not managed but automatic according to the mandate for that account. I think you may find different views nowadays on our recovery skills and results, now that we have completed several and with predominantly good to excellent results. I would really endorse our recovery skills as a strong relative strength in the industry. I don’t think you will find many, if any, loans that are suspended for any material period or at all shortly after launch. It is true we are a bit trigger happy on loan suspensions versus many platforms but you will probably find this is due to wanting to treat customers fairly and ensure people know there may be an upcoming issue on a loan rather than let people freely trade oblivious to known issues which I’m sure people would be most unhappy about. It’s a fine balance but the right approach we feel. I hope this helps any readers and would welcome people’s agreement or otherwise on my comments. Many thanks. Please explain how existing investments will be altered by "the new algorithm in February will permanently improve this going forwards". Loan 437 was suspended 1st June 2017, within 2 months of being formed - I'd question due diligence when forming this loan. Read the activity log, there's been bugger all progress, the client has fobbed AC off for 6 months, cancelling or failing to attend meetings. 20% of my rather substantial investment was put in this loan and suspended within a matter of days without my having any sayso. I get no interest and cannot recover it. What you say about suspending loans rather than continuing to allow others to invest might make sense were it not for the fact that AC seem happy to invest GEA investors money in bad loans on their behalf.
Additionally as an investor in the GEA I don't see why my investment is locked into a single loan whilst other investors in the GEA aren't invested in this loan - why isn't exposure to loans shared equally by all GEA investors?
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zlb
Member of DD Central
Posts: 1,422
Likes: 333
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Post by zlb on Jan 15, 2018 12:13:42 GMT
Hi, just to address your points, all expected losses within the automated investment accounts (eg QAA,30DAA, GBBA, PSA, GEA), post completion of any recovery action, are well covered by the provision funds’ existing cash balances. Equally yes the loans are locked for trading until recovered or until a suspension event is cleared. The diversification is close to or better than the targeted diversification in most account’s cases and the new algorithm in February will permanently improve this going forwards also. It is true there is no choice on the loans in these accounts as investment is not managed but automatic according to the mandate for that account. I think you may find different views nowadays on our recovery skills and results, now that we have completed several and with predominantly good to excellent results. I would really endorse our recovery skills as a strong relative strength in the industry. I don’t think you will find many, if any, loans that are suspended for any material period or at all shortly after launch. It is true we are a bit trigger happy on loan suspensions versus many platforms but you will probably find this is due to wanting to treat customers fairly and ensure people know there may be an upcoming issue on a loan rather than let people freely trade oblivious to known issues which I’m sure people would be most unhappy about. It’s a fine balance but the right approach we feel. I hope this helps any readers and would welcome people’s agreement or otherwise on my comments. Many thanks. Please explain how existing investments will be altered by "the new algorithm in February will permanently improve this going forwards". Loan 437 was suspended 1st June 2017, within 2 months of being formed - I'd question due diligence when forming this loan. Read the activity log, there's been bugger all progress, the client has fobbed AC off for 6 months, cancelling or failing to attend meetings. 20% of my rather substantial investment was put in this loan and suspended within a matter of days without my having any sayso. I get no interest and cannot recover it. What you say about suspending loans rather than continuing to allow others to invest might make sense were it not for the fact that AC seem happy to invest GEA investors money in bad loans on their behalf.
Additionally as an investor in the GEA I don't see why my investment is locked into a single loan whilst other investors in the GEA aren't invested in this loan - why isn't exposure to loans shared equally by all GEA investors?I've tried asking about what the improvement to diversification would be, after seeing that lenders have the experience you refer to. I've tried asking in this thread, and PM. The helpdesk at AC were completely unaware of any change due in Feb, after they asked within their team for more info, so perhaps this hadn't been cascaded down. Or perhaps it will just be a minor change.
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Post by bikeman on Jan 15, 2018 20:16:39 GMT
You wont get any answers, as usual once we start asking for details stuartassetzcapital has no answers. Put your money elsewhere.
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I hope it will work for you. Yes, it is tricky to operate it on the phone.
