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Post by jordanh96 on Feb 9, 2018 10:02:29 GMT
Sometimes the old ways are the best ways. Analysis from firm 4th Way earlier this week found that the odds of losing money in a severe recession were up to 10 times higher if you lent to just one borrower on a P2P platform.
Learning that putting all of your money on one number and trusting that the roulette wheel will spin in your favour isn’t the greatest risk management strategy isn’t terribly surprising news, but it is useful to remember. P2P investors can diversify across types of debtors, lending periods and platforms. They can invest more tax efficiently through an IFISA and they can consider information like the default rates (the number of debtors that haven’t paid) and the cushion of cash that a platform has to hand should defaults arise so that investors don’t lose out.
But investors beware for at present there are a few sticking points. Firstly, there is no set way agreed across the platforms as to how they calculate default rates and no rule that states they should publish those rates. Which means they can be lacking, or if not lacking it is difficult to know if you are comparing like with like.
Secondly, investing across platforms currently requires you to run your own spreadsheet to track results. That’s not ideal. It certainly makes life harder for the investors and indeed requires you to be an investor to have that comparative data. A little more transparency would vastly improve this sector, after all, without the right data it is difficult to make an informed decision. Aggregators of data like us work hard to persuade the platforms that this should change, investors should too.
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stub8535
Member of DD Central
personal opinions only. Not qualified to advise on investment products.
Posts: 1,447 
Likes: 945
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Post by stub8535 on Feb 9, 2018 11:20:19 GMT
Sometimes the old ways are the best ways. Analysis from firm 4th Way earlier this week found that the odds of losing money in a severe recession were up to 10 times higher if you lent to just one borrower on a P2P platform. Learning that putting all of your money on one number and trusting that the roulette wheel will spin in your favour isn’t the greatest risk management strategy isn’t terribly surprising news, but it is useful to remember. P2P investors can diversify across types of debtors, lending periods and platforms. They can invest more tax efficiently through an IFISA and they can consider information like the default rates (the number of debtors that haven’t paid) and the cushion of cash that a platform has to hand should defaults arise so that investors don’t lose out. But investors beware for at present there are a few sticking points. Firstly, there is no set way agreed across the platforms as to how they calculate default rates and no rule that states they should publish those rates. Which means they can be lacking, or if not lacking it is difficult to know if you are comparing like with like. Secondly, investing across platforms currently requires you to run your own spreadsheet to track results. That’s not ideal. It certainly makes life harder for the investors and indeed requires you to be an investor to have that comparative data. A little more transparency would vastly improve this sector, after all, without the right data it is difficult to make an informed decision. Aggregators of data like us work hard to persuade the platforms that this should change, investors should too. The platforms in p2pfa are meant to adhere to the reporting code set. This introduces some consistency. Other platforms would not want to be the first to publish in a particular sector. Indeed, some platforms go to extraordinary lengths to bury the meaningful data. As you say diversification giving a statistical reduction in the chance to lose all ones money is not rocket science. I wonder how much the report author was paid to say the blindingly obvious? Maybe all the platforms are waiting for those wise, p2p using savvy, people that protect investors money by regulation at the FCA to inform platforms how they must measure and display lates, defaults and bad debt. Holding breath is not advisable. Having this data in order to decide where IFISA money is best invested is, as you say, very important.
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Post by jordanh96 on Feb 9, 2018 13:25:36 GMT
Totally agree with you, great comments. As shown in my profile I represent the business agent platform, who's mission statement is to help entrepreneurs get the funding they need and to help investors make more money. We are doing this by displaying and comparing the whole market. However it has been difficult for us to obtain the correct information from platforms, each platform displays its loan book but differs in its description of data (for example what is a default?) This simple shared definition would allow investors to compare platforms on a level playing field. It is a brilliant industry and one we thoroughly support, but it needs more collaboration around these areas or slightly enhanced regulation, not to much I'd like to add as it could stifle the growth of the industry. Simple agreed publicly available data sets would solve the problem and is something we have been lobbying with the FCA to encourage. Thank you for your points regarding the P2PFA. Its worth noting that there are only eight platforms displayed with the association and they are only showing an accumulative data set of all the platforms put together. Downloading individual loan books are hard to find on the members websites and we have recently spent 6 months accumulating a loan book compassion tool which you can find at this address businessagent.com/tools/stats let me know your thoughts. Please note this is difficult for us to keep up to date and compare on a level playing field if we can't get more collaboration from the platforms themselves. Your help with this would be much appreciated. |
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marka
Member of DD Central
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Post by marka on Feb 9, 2018 13:59:17 GMT
... a loan book compassion tool Get more love into p2p 
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Mike
Member of DD Central
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Post by Mike on Feb 9, 2018 15:16:44 GMT
Analysis from firm 4th Way earlier this week found that the odds of losing money in a severe recession were up to 10 times higher if you lent to just one borrower on a P2P platform. 10 times higher than ... if you don't lend money to anyone? Or 10 times higher than the shard?
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Post by df on Feb 10, 2018 18:11:08 GMT
Totally agree with you, great comments. As shown in my profile I represent the business agent platform, who's mission statement is to help entrepreneurs get the funding they need and to help investors make more money. We are doing this by displaying and comparing the whole market. However it has been difficult for us to obtain the correct information from platforms, each platform displays its loan book but differs in its description of data (for example what is a default?) This simple shared definition would allow investors to compare platforms on a level playing field. It is a brilliant industry and one we thoroughly support, but it needs more collaboration around these areas or slightly enhanced regulation, not to much I'd like to add as it could stifle the growth of the industry. Simple agreed publicly available data sets would solve the problem and is something we have been lobbying with the FCA to encourage. Thank you for your points regarding the P2PFA. Its worth noting that there are only eight platforms displayed with the association and they are only showing an accumulative data set of all the platforms put together. Downloading individual loan books are hard to find on the members websites and we have recently spent 6 months accumulating a loan book compassion tool which you can find at this address businessagent.com/tools/stats let me know your thoughts. Please note this is difficult for us to keep up to date and compare on a level playing field if we can't get more collaboration from the platforms themselves. Your help with this would be much appreciated. It’s potentially a great tool, but it must be difficult to obtain accurate details from some platforms. I’ve looked at Lending Crowd, your stats displays 0% default in 2017 – there is definitely one defaulted on 16-11-2017 (I’m in it).
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pom
Member of DD Central
Posts: 1,922 
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Post by pom on Feb 10, 2018 19:05:19 GMT
Totally agree with you, great comments. As shown in my profile I represent the business agent platform, who's mission statement is to help entrepreneurs get the funding they need and to help investors make more money. We are doing this by displaying and comparing the whole market. However it has been difficult for us to obtain the correct information from platforms, each platform displays its loan book but differs in its description of data (for example what is a default?) This simple shared definition would allow investors to compare platforms on a level playing field. It is a brilliant industry and one we thoroughly support, but it needs more collaboration around these areas or slightly enhanced regulation, not to much I'd like to add as it could stifle the growth of the industry. Simple agreed publicly available data sets would solve the problem and is something we have been lobbying with the FCA to encourage. Thank you for your points regarding the P2PFA. Its worth noting that there are only eight platforms displayed with the association and they are only showing an accumulative data set of all the platforms put together. Downloading individual loan books are hard to find on the members websites and we have recently spent 6 months accumulating a loan book compassion tool which you can find at this address businessagent.com/tools/stats let me know your thoughts. Please note this is difficult for us to keep up to date and compare on a level playing field if we can't get more collaboration from the platforms themselves. Your help with this would be much appreciated. It’s potentially a great tool, but it must be difficult to obtain accurate details from some platforms. I’ve looked at Lending Crowd, your stats displays 0% default in 2017 – there is definitely one defaulted on 16-11-2017 (I’m in it). Perhaps depends if it's loans defaulted in 2017 defaulted, or loans ORIGINATED in 2017 (which certainly seems to be how many people quote defaults) - no I haven't looked as logging onto LC to see if my bad debts have recovered anything seems pointless these days
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Post by df on Feb 10, 2018 20:15:53 GMT
It’s potentially a great tool, but it must be difficult to obtain accurate details from some platforms. I’ve looked at Lending Crowd, your stats displays 0% default in 2017 – there is definitely one defaulted on 16-11-2017 (I’m in it). Perhaps depends if it's loans defaulted in 2017 defaulted, or loans ORIGINATED in 2017 (which certainly seems to be how many people quote defaults) - no I haven't looked as logging onto LC to see if my bad debts have recovered anything seems pointless these days This one was both, originated and defaulted in 2017.
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Post by adamjimenez on Mar 6, 2018 17:47:59 GMT
Perhaps depends if it's loans defaulted in 2017 defaulted, or loans ORIGINATED in 2017 (which certainly seems to be how many people quote defaults) - no I haven't looked as logging onto LC to see if my bad debts have recovered anything seems pointless these days This one was both, originated and defaulted in 2017. We go by when the loan originated. I found the problem and have updated the graphs. Thanks for pointing this out. 
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