Major default announced (W&Co)

How do you know  interest and half the capital might be wiped out? Have they also stated this to you?

Here's the info I received for my £10k investment started on 17/02/2014 for 5 years at 6.38%. It had been paying £53.17 per month.

'£624.27 has been suspended from your 5 Year Income. You continue to earn 6.38% on the remainder of your capital. With the anticipated losses factored in, your effective interest rate is now 5.78%

On the £624.27 currently suspended, the forecast recovery value is £354.03. Wellesley is working hard to maximise the recovery of these loans and will keep you updated.

Expected recovery date for total Forecast Recovery Amount: 30/04/2020.
Please note, you will not be able to withdraw your suspended loan balance until the loans are fully recovered. '

 
It's not great, but it's not a disaster.

  Tim

Yes, I’ve just had the same. A large part of my funds is due to mature next month, with interest having been paid to me correctly throughout the term and no notification of any defaults, and suddenly now it turns out I’m down 6.24% of my capital, while earning annual rates of 4.75% and 5.5%.

Snippet from mine

As you are aware, Wellesley spreads its Peer-to-Peer investments across all loans which means that all investors have a proportionate share of every loan, maximising diversification while minimising the risk exposure to one loan.

All Peer-to-Peer investors hold 6.24% of their investment in these defaulted loans. Your current exposure to these loans is shown below:

Your total Peer-to-Peer investment balance: £6273.34
Suspended Loan Balance: £417.66
Forecast Recovery Balance: £236.90
Current expected recovery date: 30/04/2020

It could have been a lot worse, only in less there’s more to come

I haven’t given this much thought for a long time as I’ve been running down my Wellesley investment since 2015. However, I remember Wellesley marketing the benefits of the belt and braces approach of having all loans secured on property and covered by a provision fund. As the email makes no reference to a provision fund at all, I’d presume this has already been depleted. That could mean we are in for further losses.


I also remember that after I’d stopped investing, rates for new investment went as low as something under 2%. Anyone who invested at these rates will already be seeing a wipeout of profits.


Personally, I haven’t for some time invested any significant sums in any of these schemes where you can’t see what’s under the bonnet. The phrase “picking up pennies in front of a steamroller” unfortunately comes to mind.


I do think this may be a significant problem at Wellesley and not something the industry needs after the Collateral debacle.

In fact, wasn't there a third level of security advertised, which was that Wellesley invested some of its its “own money” in each loan and would take first loss. No reference to that either in the email, so that must have gone out the window at some point too.

Not great news, but considering www.altfi.com/article/2995_peer_to_peer_lender_wellesley_co_publishes_financial_results_and_loan_book_cfo_resigns, then why wasn't the loss crystallised before 5 Apr.  I'm not a tax whizz so I suspect the loss could be backdated but now it a year before I can recharge against tax.