Provision Fund paying out today

Fair enough, but  your own "Item 3" from above states :  

"Recession risk - Brexit worries , continuing European economic incompetence, US/China trade. More bad loans will be hidden in the Access accounts
"

Well if that lot comes to pass, the stock market will be the last place you'll want to be invested ..... unless you're going short 

You are correct!

I was stunned, when I withdrew a reasonable sum from my GBBA2 account a few weeks ago, the cash generated was “swept” into the QAA. On analysing the QAA loans I had 3% of my funds in ~40 Suspended Loans! These loans were all suspended prior to Christmas and therefore should not have been tradable.

Yet my immediate request to withdraw all the cash was honoured in full (thankfully), but obviously some poor sap has unknowingly picked up these Suspended loans. 

When the music stops it’s not going to be pretty!

You try to make too many points.
However...

1. A loan is “Suspended” for a good reason, usually not a positive event. I, therefore, do not expect to have money I am “Cashing-In” moved into such loans, all I did was hit the “Withdraw” button.

2. The AC PF is woefully under covered against most comparable estimates of potential future losses, at far less than 1%. Given that, at this point in the economic cycle, we are likely, at best experiencing a slowdown and at worst a recession exasperated by Brexit . Secured loans are returning anything from 0-100% of Capital on other platforms. Less than 1% average loss is looking at a gold bar through a clear window.

3. I had 3% of my QAA account in “Suspended” loans after just 24 hours in the QAA. The PF, by AC’s stats, is less than 0.5%. Ergo, the PF has no chance of ever covering the exposure to these loans. Liquidity from some poor sap picking up the slack is their backstop, when this disappears it’s the end. The question is - will you be able to spot the tipping point?

4. The RS PF can only buy defaulted loans where it has the real cash to cover the potential loss in full. When it did not, as has been fully admitted by RS last year, they capitalised the loans onto their own books to ensure no Lenders lost money. I’m not sure AC have the deep pockets, or desire, to do that. Projecting losses soooo small ensures that they are kicking the can far down the road in the hope that no one notices.

mary , a few comments on your points, if they help:

1. Looking at my suspended loans on QAA (which will be the same as everyone else’s) they include some loans suspended for voting, some I’m not at all concerned about & others that are about to be extended (after which trading will resume). There are ofcourse some troubled loans there too (as these accounts hold everything in the loan book), but on many of these the QAA/30D is holding marginal sums. Deduct the loans I’ve mentioned, adjust for at least 5 cases of multiple loans connected to the same borrower & you’re left with about 20 loans, from a total of 475 in AC’s live loan book (& 320 more in the Repaid loans tab). Many are relative tiddlers. Others have had most of their capital already paid back. If we look around the world of p2p I think you’ll find much worse.

Wrt only hitting the withdraw button, you also must have had the sweep function turned on. You can turn this off by choosing the “Do not invest idle cash” option in QAA on your dashboard.

2. PF cover at 30/9/18 on expected losses for the QAA/30D was 3.22. In addition to the £2m cover for the 30D there was £1.1m for the QAA (so total £3.1m across these). That was an increase of £1.1m on the cover reported 5 months earlier at 30/4, assuming a similar rate of increase since Sep (it might be higher) we’re probably at about £4m now.

All the other packaged accounts have their own PF cover, which at e/Sep was higher still for GBBA2 & PSA (3.3 – 3.8). Total cover across the packaged accounts was £4.8m at 30/9 & I’d estimate £6.5m now. The cover actually increased significantly in the 5M to 30/9 & I suspect has continued to since. This is good news for those awaiting a pay-out (& possibly a reason why it’s happening).

This PF cover is, naturally, aside from any security, backed by (tmk, I’ve used 15 platforms over the last 5Y) arguably the best recoveries team in the P2P business.

3. Not sure where you got your 0.5% number. copacetic ’s link has the right one for the 30D, from which you can hop to the relevant PFs on the other accounts clicking on Invest top left, choosing the account & then clicking on Read More under “How the account works”.

As to the “after just 24 hours”, I have bad news. AC will diversify you across all loans in about a second (or as quick as you can look), that’s just how the QAA works. It will (in normal market conditions) allow you to exit just as quickly.

I have lots of sympathy for those caught out by the old diversification algo. They are right to feel aggrieved. But PF cover going north & expected losses south ought to be reassuring, & one day (soon?) the unbelievable will happen & the title of this thread will come true.

Good and helpful analysis. My gripe -and AC jaundiced view - is with series 1 of the BA and GE accounts. The combination of them being lumbered with mega loans or mega combination of connected loans and the not-diverse algo, leaves them and my holdings in a bad place. And one which was frankly - if you were on the inside and knew how they were going to be used e.g. as effective underwriters for the likes of DM - a wholly predictable outcome.

I think you are spot on with this analysis......not going to be a car crash though, more likely a multiple pile up and you can rest assured its the lenders that will be bearing the brunt of it while the borrowers just walk away with our money.

Yeah, best of luck with that.