stevio
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Post by stevio on Apr 19, 2018 12:23:39 GMT
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 I wouldn't use the "none of our investors have ever lost a penny" line - most have heard this from every platform going - it particularly leaves a bad taste when remembering Lendy used to use this all the time, in a similar way boasting their loans were provision fund backed and when sustaining substantial defaults, hid the amount in the provision fund away from public view and didn't use it Forgive us, this might not be your intention here, but your USP seems to be on a slippery slope to gradually being eroded by policy changes now and potentially in the future into a simple provision fund, which no experienced investor holds in high regard Its up to you, but if sentiment on this thread is anything to go by, do you see a single post that approves of your change? Added poll to see..
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Liz
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Post by Liz on Apr 19, 2018 12:30:23 GMT
The poll would be better with the options of; Worse or The same protection.
Clearly no one will think it's better.
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Apr 19, 2018 12:34:12 GMT
Is this not yet another manifestation of the wider trend among Platforms to further align their interests with Borrowers, to the increasing detriment of Lenders? You know, we who put up the dosh, take the risk, and often get shafted for our troubles.  EDIT - We still have the power, vote with yer spondoolies folks. |
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carolus
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Post by carolus on Apr 19, 2018 12:34:15 GMT
I am getting slightly tired of this "low info, big hype" style of information release from platforms. Would be much happier if they (not just Kuflink) would be upfront about exactly what is changing, what the new structure will be, and the reasons for the change.
As for the specific changes here, I'm not enthused with joy. Pretty clearly this reduces the amount of money K need to put at risk, presumably by a rathee significant amount, since it now only needs to cover 20% of total expected defaults rather than 20% of the loanbook. This brings with it an additional risk - we need to trust Kuflink's projections of future defaults.
I'd be much happier if we'd been provided with more information about how the new system would work, clarity about calculations etc. As it is, from the info provided, I'm not sure why I should choose Kuflink over other platforms.
Something in Kuflink's favour might be if the new structure meant that loans in Autoinvest and ISA were 20% covered instead of the current 5%, but it's not clear to me whether that is the case.
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stevio
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Post by stevio on Apr 19, 2018 12:37:23 GMT
The poll would be better with the options of; Worse or The same. Clearly no one will think it's better. The KF email states it is a "positive change", so giving the benefit of the doubt Besides, it is only rough like or dislike and I only have the option to remove a poll, not edit it PS - has your name always held Lendy in such high regard or, judging by your post count, are you more commonly known under a different name?
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Liz
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Post by Liz on Apr 19, 2018 12:50:22 GMT
The poll would be better with the options of; Worse or The same. Clearly no one will think it's better. The KF email states it is a "positive change", so giving the benefit of the doubt Besides, it is only rough like or dislike and I only have the option to remove a poll, not edit it PS - has your name always held Lendy in such high regard or, judging by your post count, are you more commonly known under a different name? We probably need a second poll as Kufflink claim we have the same protection as before. I doubt many believe that!
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Apr 19, 2018 12:56:20 GMT
What happens if defaults are higher and wider than expected or provisioned for? Under the current system Kuflink would be hit first for 20% equally across all the loans in default, under the new system the provision fund may run out of funds and Kuflink say sorry no more funds available and just go the way of Collateral into administration leaving investors to pickup greater losses. I wonder if this change could be driven by the FCA dislikes being communicated to Kufflink at this late stage. Not unusual with that wonderful organisation to move this glacially.
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Apr 19, 2018 14:51:02 GMT
This response came from Rachel.
"With regard to loans that are being drawn in tranches – no we will not be taking a 20% stake in future tranches, however the 20% first-loss is still in place for these loans".
This is talking about current loans already drawn. No detail was given about how the "first-loss" cover would be given. I have requested clarification.
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invester
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Post by invester on Apr 19, 2018 15:46:57 GMT
Indeed. A platform without skin in the game can delay debts indefinitely with no detriment to itself.
Cmon guys, this is really disappointing. You had something here that differentiated you from the competition, and you have decided not to do it anymore.
I think that's really short-sighted. You are probably heavily encouraged that on growth projections you might become heavyweights, but IMO this has been skewed massively by people joining just to get the loyalty bonus.
It increases the risk to lenders, and therefore should be compensated with a higher rate of interest. It is rather obtuse to claim it offers the same level of protection, in the same way that we can claim a stopped clock is working twice a day.
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nyneil
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Post by nyneil on Apr 19, 2018 15:47:11 GMT
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 It seems that defaults are increasing across most platforms even though the economy is fairly buoyant at the moment. In the event of a downturn (this is when rather than if), basing your PF on past performance will be inadequate, so investors will be placed at greater risk than is currently the case.
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Post by peerlessperil on Apr 19, 2018 15:58:34 GMT
To spin this as a benefit to investors is rather cheeky, and possibly naughty.
To state the bleeding obvious, Kufflink's "20% guarantee" (as they call it - it is really a subordinated tranche) will go from being fully collateralised to partially collateralised. There is no way that this can be described as lenders receiving the same protection they did previously, and Kuflink's claims to this effect verge on the misleading. I suspect the FCA would not be happy to see what they have posted on this forum.
I would have more sympathy if they'd been honest and admitted that the current model was constraining the growth they need to reach sustainability. Platforms need a certain loan volume to reach sustainability, and we all have an interest in sustainable platforms.
If they publish the detailed methodology and keep the provision fund balance updated on a "live" basis I'll take a look, but at this stage it simply looks like a crude attempt at smearing lipstick on a pig.
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nyneil
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Post by nyneil on Apr 19, 2018 16:23:17 GMT
"smearing lipstick on a pig" Never heard that before, but i love it  |
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Post by Jack Barlow on Apr 19, 2018 16:30:58 GMT
Very disappointed with the announced change, though I suspect KL will weather the storm.
I don't expect I'll be making any further KL investments; timing isn't great as I'd only just decided to start ramping up my KL exposure after trialling for 12 months!
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Apr 19, 2018 16:48:15 GMT
Suppose the PF funding rate is x%. If there are no losses then with this change Kuflink's profits will be reduced by x% of the loan plus the lost interest on 20% of the loan. The only scenario in which this change can be good for Kuflink is if there are substantial losses when 20% of losses will be greater than this profit reduction. So sadly I assume this is what Kuflink expect or at least fear. This is not an inducement to invest.
If Kuflink really think that this change is good for investors then why not extend it on an optional basis to existing loans? Lenders could be offered a top up of 25% of their holding and rely on the PF for protection. There would be a little extra admin in the event of a default as the two categories of lenders might need to be treated slightly differently, but nothing much.
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Liz
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Post by Liz on Apr 19, 2018 16:54:54 GMT
Suppose the PF funding rate is x%. If there are no losses then with this change Kuflink's profits will be reduced by x% of the loan plus the lost interest on 20% of the loan. The only scenario in which this change can be good for Kuflink is if there are substantial losses when 20% of losses will be greater than this profit reduction. So sadly I assume this is what Kuflink expect or at least fear. This is not an inducement to invest. If Kuflink really think that this change is good for investors then why not extend it on an optional basis to existing loans? Lenders could be offered a top up of 25% of their holding and rely on the PF for protection. There would be a little extra admin in the event of a default as the two categories of lenders might need to be treated slightly differently, but nothing much. Kufflink have clearly run out of money to fund 20% going forward. I see the platform Rep has voted in the poll 😏
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