stevio
Member of DD Central
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Post by stevio on Apr 19, 2018 11:20:37 GMT
We’re making a positive change to our proposition…
Have you ever topped up your Kuflink wallet to invest in an exciting new opportunity, only to find the deal is fully funded once you’re ready to click ‘Invest Now’?
If so, we have some great news for you!
From now on we are increasing the availability of each loan from 80% to 100%. This means there is more opportunity for you, and the rest of our investor community, to make your money grow further!
The best part…
You will still benefit from the same unbeatable 20% guarantee upon which we earnt your trust and loyalty!
Kuflink will continue to cover the first 20% loss if it occurs on all Select-Invest loans – and as you can see on our platform, our investors have never lost a penny!
How will we cover 20% of losses?
Kuflink has already begun to increase the size of its provision fund just in case any loss did occur.
Does this affect the risk exposure of each new deal?
Your risk exposure will remain the same as it is always has been; whether we co-invest alongside you or provide the first 20% cover of loss, the protection you have is the same.
Does this change affect loans that are already live?
No, all existing loans that are live will still have a 20% co-investment from Kuflink Bridging which is your 20% first loss guarantee on all Select-Invest loans.
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stevio
Member of DD Central
Posts: 2,065
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Post by stevio on Apr 19, 2018 11:23:30 GMT
Changing from investing alongside to a provision fund, does not appeal to me
A provision fund is often deemed discretionary (whether now or changes made at a later date). We have seen at Lendy that often the PF is NOT used and does NOT have sufficient funds to cover the vast majority of losses. Additionally it is "hidden", so lenders can not see if there are sufficient funds
Obviously this reduces costs for KL as they no longer have to find funds to cover 20% invested alongside
However this, for me, now removes the main USP KF had as well as removing the justification for such low rates compared to competitors
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Post by kuflink on Apr 19, 2018 11:32:26 GMT
Changing from investing alongside to a provision fund, does not appeal to me A provision fund is often deemed discretionary (whether now or changes made at a later date). We have seen at Lendy that often the PF is NOT used and does NOT have sufficient funds to cover the vast majority of losses. Additionally it is "hidden", so lenders can not see if there are sufficient funds Hello, Thank you for your message, we cannot comment on the model of other peer-to-peer platforms such as Lendy, however we can assure you that our provision fund is being used in the correct way and will provide for 20% cover of losses. We have had discussions with the FCA regarding this change to our proposition and they are satisfied with our proposal and the way in which we are accounting for the 20% guarantee. Thank you Rachel
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Post by kuflink on Apr 19, 2018 11:34:43 GMT
However this, for me, now removes the main USP KF had as well as removing the justification for such low rates compared to competitors Hello, This change to our proposition does not remove our USP, the benefit of the 20% co-investment was that it covered the first 20% of losses if they were to occur - and this is exactly what we are still providing to our community of investors. Thank you Rachel
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dandy
Posts: 427
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Post by dandy on Apr 19, 2018 11:37:22 GMT
Changing from investing alongside to a provision fund, does not appeal to me A provision fund is often deemed discretionary (whether now or changes made at a later date). We have seen at Lendy that often the PF is NOT used and does NOT have sufficient funds to cover the vast majority of losses. Additionally it is "hidden", so lenders can not see if there are sufficient funds Obviously this reduces costs for KL as they no longer have to find funds to cover 20% invested alongside However this, for me, now removes the main USP KF had as well as removing the justification for such low rates compared to competitors Totally agree with this I cannot see how the comment that risk is the same can be backed up. If Ly had 20% (first loss) in each loan on their platform I think we would all feel quite comfortable right now. Kuflink would have been better off saying their 20% skin in game is hindering their ability to grow so they are changing things, which is fair enough. But to pretend it is the same but even better is taking us for complete idiots
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dandy
Posts: 427
Likes: 341
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Post by dandy on Apr 19, 2018 11:39:24 GMT
However this, for me, now removes the main USP KF had as well as removing the justification for such low rates compared to competitors Hello, This change to our proposition does not remove our USP, the benefit of the 20% co-investment was that it covered the first 20% of losses if they were to occur - and this is exactly what we are still providing to our community of investors. Thank you Rachel No it isn't. 20% in cash is not the same as a promise of 20% cover which is not guaranteed. Surely you get that.
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littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,045
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Post by littleoldlady on Apr 19, 2018 11:41:12 GMT
2 minutes ago
Unwelcome change. They no longer have 20% skin in the game but now 'guarantee' first 20% from a new provision fund. They say it makes no difference to the security and claim that it's better for lenders as there is now 20% more availability. But my feeling is that there is a psychological difference when they are evaluating a loan proposal which, if I'm right, can only lead to riskier loans. IMO they have given up their USP and would have been wise to consult lenders first.
They could have provided the same 'benefit' to lenders without completely surrendering their USP by offering their 20% share of each lender's loan back to those same lenders, backed up by the PF. In other words each lender could request a 25% top up if (s)he wanted it.
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kaya
Member of DD Central
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Post by kaya on Apr 19, 2018 11:45:25 GMT
Agreed, not the same. If you want to improve things for lenders kuflink then introduce a secondary market. And just think, then you could be able to sneakily sell your 20% holdings! |
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IFISAcava
Member of DD Central
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Post by IFISAcava on Apr 19, 2018 11:49:37 GMT
Agreed, not the same. If you want to improve things for lenders kuflink then i ntroduce a secondary market. And just think, then you could be able to sneakily sell your 20% holdings! This is key
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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 Apr 19, 2018 11:53:15 GMT
Changing from investing alongside to a provision fund, does not appeal to me A provision fund is often deemed discretionary (whether now or changes made at a later date). We have seen at Lendy that often the PF is NOT used and does NOT have sufficient funds to cover the vast majority of losses. Additionally it is "hidden", so lenders can not see if there are sufficient funds Obviously this reduces costs for KL as they no longer have to find funds to cover 20% invested alongside However this, for me, now removes the main USP KF had as well as removing the justification for such low rates compared to competitors I wonder what will happen with loans where tranches are still to be drawn in the 20% investment from Kuffling already in place on T1? Can't find mention on their website yet of how the new provision fund will operate. Before we can judge if it gives similar levels of risk reduction we need the detail. Will 20% of all future loans be paid into the fund or just a sum to bring it up to the 20% of elligible order book outstanding? Will payouts be mandatory or discretionary and will these be fixed at 20% of the loan or the full amount if lower losses happen? How a platform thinks thos change is in any way fair to investors is beyond comprehension.
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Liz
Member of DD Central
Posts: 2,426
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Post by Liz on Apr 19, 2018 12:00:13 GMT
Changing from investing alongside to a provision fund, does not appeal to me A provision fund is often deemed discretionary (whether now or changes made at a later date). We have seen at Lendy that often the PF is NOT used and does NOT have sufficient funds to cover the vast majority of losses. Additionally it is "hidden", so lenders can not see if there are sufficient funds Obviously this reduces costs for KL as they no longer have to find funds to cover 20% invested alongside However this, for me, now removes the main USP KF had as well as removing the justification for such low rates compared to competitors I wonder what will happen with loans where tranches are still to be drawn in the 20% investment from Kuffling already in place on T1? Can't find mention on their website yet of how the new provision fund will operate. Before we can judge if it gives similar levels of risk reduction we need the detail. Will 20% of all future loans be paid into the fund or just a sum to bring it up to the 20% of elligible order book outstanding? Will payouts be mandatory or discretionary and will these be fixed at 20% of the loan or the full amount if lower losses happen? How a platform thinks thos change is in any way fair to investors is beyond comprehension. It will be far less than 20%. They will no doubt estimated defaults and losses and put in a much lower figure maybe as low as 1-3%! Who knows. 2% if they assume 20% will result in a loss and they have to pay out on average 50% of the guarantee. 20%(original amount) * 20%(defaulted loans)*50%(payout amount) Using 40%, 100% would result in 8% in the PF
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Post by kuflink on Apr 19, 2018 12:05:42 GMT
Hello, This change to our proposition does not remove our USP, the benefit of the 20% co-investment was that it covered the first 20% of losses if they were to occur - and this is exactly what we are still providing to our community of investors. Thank you Rachel No it isn't. 20% in cash is not the same as a promise of 20% cover which is not guaranteed. Surely you get that. Hello, Yes, I do understand the reason for your concern. However, it is important to highlight that not every single loan on our platform is going to go into default, this is highly unlikely, and so having a 20% stake in every opportunity is not required – those funds can be used to increase our loan portfolio and thus the number of opportunities on our platform. We can still provide the same guarantee to our investors in the form of 20% loss protection without the need to set aside 20% of every loan amount, but rather ensure that our provision fund is substantial enough to cover losses based on past performance of our loans. Thank you Rachel
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Post by kuflink on Apr 19, 2018 12:10:02 GMT
Changing from investing alongside to a provision fund, does not appeal to me A provision fund is often deemed discretionary (whether now or changes made at a later date). We have seen at Lendy that often the PF is NOT used and does NOT have sufficient funds to cover the vast majority of losses. Additionally it is "hidden", so lenders can not see if there are sufficient funds Obviously this reduces costs for KL as they no longer have to find funds to cover 20% invested alongside However this, for me, now removes the main USP KF had as well as removing the justification for such low rates compared to competitors Totally agree with this I cannot see how the comment that risk is the same can be backed up. If Ly had 20% (first loss) in each loan on their platform I think we would all feel quite comfortable right now. Kuflink would have been better off saying their 20% skin in game is hindering their ability to grow so they are changing things, which is fair enough. But to pretend it is the same but even better is taking us for complete idiots Hello, Thank you for your comments, as mentioned below the funds that we have previously set aside can now be used to increase our loan portfolio and thus the number of opportunities on our platform. So yes, you are correct in saying that this change will allow us to grow as a business. The protection you receive as an investor is the same as it always has been. You would only ever feel the true benefit of our 20% co-investment in the event that a loss were to occur, and to date none of our investors have ever lost a penny. Thank you Rachel
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dandy
Posts: 427
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Post by dandy on Apr 19, 2018 12:17:20 GMT
Hello, Thank you for your comments, as mentioned below the funds that we have previously set aside can now be used to increase our loan portfolio and thus the number of opportunities on our platform. So yes, you are correct in saying that this change will allow us to grow as a business. The protection you receive as an investor is the same as it always has been. You would only ever feel the true benefit of our 20% co-investment in the event that a loss were to occur, and to date none of our investors have ever lost a penny. Thank you Rachel You really should stop posting false statements
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Liz
Member of DD Central
Posts: 2,426
Likes: 1,297
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Post by Liz on Apr 19, 2018 12:17:24 GMT
So what percent will be placed into the PF? What happens if the % falls below the target, will it be topped up by Kufflink? Will the % be allowed to grow above target when defaults are low, or will less be paid in to bring the figure back down to target?
So many questions.
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