Was a good run

The problem is that I do not think the figures tell you much about the new 'fairer' FC. Your 7.7% annualised return calculates the return averaged over the four years you have been a member - and so the recent performance just contributes to a part of that. Mine still says 11%, though since I restarted in Jan I know it is far less.

Your estimated return of 7.5% is the same as everyone else - approx - but it is simply a future estimate based on your un-defaulted loans, 11.3%, and subtracting the 1% fee and FC's projected future losses for the bands. It's all future and does not take account of losses, which are past and will just affect the annualised return.

So you have no measure there of what you are actually getting from your portfolio since the change. You may well be getting 7.5%, but it could be less or more.

I agree that 7.5% is good for a platform which requires no work and has good liquidity.

Mar 28, 2018 22:08:51 GMT ashtondav said:

did The flippers lower returns to non flippers?

Yes, especially the bot-purchasers of the E loans.

In the early days the relationship between FC and flippers was far more complicated, because there were many cases where FC actually encouraged flippers to get loans funded, which otherwise could not be funded within the diversity rules which FC promoted. In the days of reverse auctions there were A+ loans over 14% interest. These were the large ones which Autobid could not swallow and where the large sums from flippers were required to get them funded. Then there were the times when loan supply exceeded demand, and where cashback was offered to get flippers to purchase large amounts.

Then finally, there were the property loans, which were systematically, for over a year, front-loaded with 1% or 2% cashback (and in one case 3%), again with the intention of encouraging people to take large amounts, well beyond the diversity guidelines, which they would sell over a period, to churn the capital many times - though a rather slower flip. This did affect the borrowers because rates were also higher on the large projects, irrespective of risk. This encouragement of slow flipping is the direct cause of lenders being saddled with large stakes in the defaulted London loans. My own good results from old FC are due to the property loans, though with a strict exit policy before they failed to repay.

FC needed flippers, and accepted the consequences that some would lenders would do better than others. That difference was also inherent in the reverse auction process, where generally autobidders were in loans at lower rates that manual bidders. The new 'fairer' system is now only possible because FC is mature and large enough to do without flippers, and I suspect FCA approval was simplified. I think that they have done the right thing for the business and the majority of lenders (now just investors).