dandy
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Post by dandy on May 25, 2018 8:05:52 GMT
I'm not sure I reach the same conclusion on RS. Their site is very carefully worded: yes, there is a provision fund (which was topped up with £80M of equity last year, almost the same as the total interest they had paid out to clients as at that time). However, in the event of the provision fund not continuing to be propped up (it has already proven to not be sufficient), each lender is directly exposed to his / her loans - not the general portfolio, as RS removed the mutualisation structure last year. In short, if the PF fails, and your single borrower fails (which you have no visibility on and can't choose), then you can lose your entire investment. Regardless of what happens to everyone else. One of the reasons we don't use RS. Are you sure about that £80m? I thought you may have inadvertently added a 0 but then I see you go on to compare it to interest paid out which would also be ~ £80m. Please can you provide a source for your £80m claim? I also think the second part re: "mutualisation" as you call it is also wrong. Please provide a source for your claim that if the PF fails completely, we are not pooled with losses shared by all.
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Post by stevefindlay on May 25, 2018 8:33:14 GMT
I'm not sure I reach the same conclusion on RS. Their site is very carefully worded: yes, there is a provision fund (which was topped up with £80M of equity last year, almost the same as the total interest they had paid out to clients as at that time). However, in the event of the provision fund not continuing to be propped up (it has already proven to not be sufficient), each lender is directly exposed to his / her loans - not the general portfolio, as RS removed the mutualisation structure last year.In short, if the PF fails, and your single borrower fails (which you have no visibility on and can't choose), then you can lose your entire investment. Regardless of what happens to everyone else... I had missed that. Thank you.
Greenwood2 - The Stabilisation Period has the effect of sharing the pain for as long as it is in effect, but it falls short of full mutualisation because (1) lenders are still exposed to their specific loans; and (2) it only applies once have RS put their platform into a Stabilisation Period. It's not clear what happens if RS are no longer around to do that, or (perhaps more likely) if RS goes out of business after having set Interest Reduction and Capital Reduction at a level that proves to be insufficient. One would hope the power (and duty) to make necessary changes passes to whoever operates their "living will" but it doesn't say that anywhere. It is also subjective and not formulaic: "If...in the opinion of Ratesetter...". A better approach would be if x happens then y will happen, and this is managed by an independent trustee. Otherwise, it's just a 'love letter'. It also doesn't remove the fact that you are ultimately subject to a single (of few) borrower risk - which you have no ability to select or see. But they must be doing something right, as they wouldn't have successfully brought in £70M of investor capital during ISA season.
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jlend
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Post by jlend on May 25, 2018 9:32:31 GMT
I'm not sure I reach the same conclusion on RS. Their site is very carefully worded: yes, there is a provision fund (which was topped up with £80M of equity last year, almost the same as the total interest they had paid out to clients as at that time). However, in the event of the provision fund not continuing to be propped up (it has already proven to not be sufficient), each lender is directly exposed to his / her loans - not the general portfolio, as RS removed the mutualisation structure last year. In short, if the PF fails, and your single borrower fails (which you have no visibility on and can't choose), then you can lose your entire investment. Regardless of what happens to everyone else. One of the reasons we don't use RS. Are you sure about that £80m? I thought you may have inadvertently added a 0 but then I see you go on to compare it to interest paid out which would also be ~ £80m. Please can you provide a source for your £80m claim? I also think the second part re: "mutualisation" as you call it is also wrong. Please provide a source for your claim that if the PF fails completely, we are not pooled with losses shared by all. I assume he is refering to this with regard to the 80m. In 2017, RateSetter restructured its wholesale lending and as part of that restructuring controlled three businesses. The operations of two of the businesses, which specialise in motor finance, were subsequently integrated into RateSetter. The assets of the other business, which specialises in advertising, were sold in spring 2018. Each business still has outstanding loans with RateSetter’s investors, which are repaying in line with their schedules. New investments and reinvestments may be matched with one or more of these loans. The loans made to the motor finance businesses are secured on their underlying loan portfolios. RateSetter intervened to cover the repayments of the advertising business using RateSetter’s own company funds. This prevented the loan from being defaulted to the Provision Fund. This intervention was an exception and will not happen again. These loans are reflected in RateSetter’s performance figures.
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dandy
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Post by dandy on May 25, 2018 9:57:14 GMT
jlend yes I am aware of that issue but do not think it was anything like £80m. Happy to be corrected but my understand was that around £80m had been lent to the "troublesome" borrowers, but much of that was repaid in full. The PF top up to cover the possible losses on those loans was somewhere in the £10m-£15m region IIRC. To suggest RS had to pump in £80m is totally twisting the truth - as is suggesting if PF goes pop I could lose all my money to a single borrower. More sensationalism that is utter rubbish lack of reply says it all - i rest my case.
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jlend
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Post by jlend on May 25, 2018 10:03:52 GMT
jlend yes I am aware of that issue but do not think it was anything like £80m. Happy to be corrected but my understand was that around £80m had been lent to the "troublesome" borrowers, but much of that was repaid in full. The PF top up to cover the possible losses on those loans was somewhere in the £10m-£15m region IIRC. To suggest RS had to pump in £80m is totally twisting the truth - as is suggesting if PF goes pop I could lose all my money to a single borrower. More sensationalism that is utter rubbish lack of reply says it all - i rest my case. Agreed
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Post by stevefindlay on May 25, 2018 10:30:50 GMT
jlend yes I am aware of that issue but do not think it was anything like £80m. Happy to be corrected but my understand was that around £80m had been lent to the "troublesome" borrowers, but much of that was repaid in full. The PF top up to cover the possible losses on those loans was somewhere in the £10m-£15m region IIRC. To suggest RS had to pump in £80m is totally twisting the truth - as is suggesting if PF goes pop I could lose all my money to a single borrower. More sensationalism that is utter rubbish lack of reply says it all - i rest my case. Agreed That's why I took this screenshot back in July - love the juxtaposition of the two articles: 
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dandy
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Post by dandy on May 25, 2018 10:52:19 GMT
Your last post (amusing as that may be) is not a serious attempt to justify your comments. So the honorable thing to do is to retract them. Your choice, for now.
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Greenwood2
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Post by Greenwood2 on May 25, 2018 11:25:09 GMT
I'm not sure I reach the same conclusion on RS. Their site is very carefully worded: yes, there is a provision fund (which was topped up with £80M of equity last year, almost the same as the total interest they had paid out to clients as at that time). However, in the event of the provision fund not continuing to be propped up (it has already proven to not be sufficient), each lender is directly exposed to his / her loans - not the general portfolio, as RS removed the mutualisation structure last year.In short, if the PF fails, and your single borrower fails (which you have no visibility on and can't choose), then you can lose your entire investment. Regardless of what happens to everyone else... I had missed that. Thank you.
Greenwood2 - The Stabilisation Period has the effect of sharing the pain for as long as it is in effect, but it falls short of full mutualisation because (1) lenders are still exposed to their specific loans; and (2) it only applies once have RS put their platform into a Stabilisation Period. It's not clear what happens if RS are no longer around to do that, or (perhaps more likely) if RS goes out of business after having set Interest Reduction and Capital Reduction at a level that proves to be insufficient. One would hope the power (and duty) to make necessary changes passes to whoever operates their "living will" but it doesn't say that anywhere. If ratesetter go out of business all bets are off. The Collateral fiasco is showing how vulnerable lenders could be in the event of any platform collapse. But to try to prevent that happening RS have put in place procedures to shore up the PF by cutting lender rates overall and in the extreme taking a % of capital and this would be spread across all lenders not just the ones with defaulted loans at the time. Which would be fair since other lenders may have benefited from the PF previously. This was pretty thoroughly discussed on the RS board when the T&Cs changed, some lenders didn't like the new T&Cs and removed funds; although it might well merit revisiting in the light of the Collateral collapse. Should these posts be moved to the RS board, so that RS lenders in general see them? Edit: And of course you can diversify as much as you want on RS by drip feeding in funds.
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Post by stevefindlay on May 25, 2018 11:45:58 GMT
Your last post (amusing as that may be) is not a serious attempt to justify your comments. So the honorable thing to do is to retract them. Your choice, for now. Wow - I'd expect a dedicated member of the DD Central forum to want to investigate further, rather than write a comment like that! So let's explore this, using only publicly available information: ADPOD: a £13-15M write-off so far - Sat with £15.4M of negative equity as at 31 March 2017: beta.companieshouse.gov.uk/company/09005743/filing-history- And a £13.8M impairment on Ratesetter as at 31 March 2017, with RS having made payments on Adpod loans from August 2016: beta.companieshouse.gov.uk/company/07075792 It is now a subsidiary, and Ratesetter has apparently injected further capital of £1.5M to prop it up. It is not clear if that is throwing good money after bad money. Time will tell. George Banco: accounts are less up to date. As at 31 Dec 2016 owed £31M - unclear what sort of recovery will come from this. Net liabilities of £3M. Vehicle Trading Group: beta.companieshouse.gov.uk/company/08395040/filing-history - See Administrators report: £1.5M still outstanding to RS. With just £2k collected from £5.9M of debtors. So possibly unlikely to get much more there(?). Its two subsidiaries were sold to Ratesetter Motor Ltd ( beta.companieshouse.gov.uk/company/10736638) which inherited £37M of debt (see 7.2 of Administrators update report). RML hasn't yet filed accounts - so unable to see consolidated performance of this new group. - Vehicle Credit Limited - one of its subsidiaries have accounts which are 5 months overdue: beta.companieshouse.gov.uk/company/07941730 That doesn't give me a warm fuzzy feeling though. If it was good news, I'd want to get it out asap. - Vehicle Stocking Limited - only has accounts made up until 31 Mach 2017 - before the restructuring: beta.companieshouse.gov.uk/company/07380405/filing-historySummary:ADPOD: £13-15M loss. George Banco: £3M exposure, potentially as high as £31M; unless it can trade its way out. VTG: £1.5M write off likely at parent company level; £37M exposure with an unknown outcome. Total: £17.5M-£19.5 already in the hole. Questions over a further £40M-68M. Either way, a potential £60M-90M (?) dodge for the PF.Of course, if you have better information, then I will be happy to revise my comments and analysis. Until then, this is a watching brief.
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dandy
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Post by dandy on May 25, 2018 11:57:42 GMT
Your last post (amusing as that may be) is not a serious attempt to justify your comments. So the honorable thing to do is to retract them. Your choice, for now. Wow - I'd expect a dedicated member of the DD Central forum to want to investigate further, rather than write a comment like that! Never posted in DD, rarely read it unless I cant sleep I have zero interest in these accounts and they are of zero relevance You said RS had topped up the fund by £80m. They have not done anything of the sort. So your comment is untrue. They topped up about £15m to cover all the expected losses. Good on them I say! Perhaps you can do that with the funds you invested in Col? Nah, didnt think so
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Post by stevefindlay on May 25, 2018 12:18:23 GMT
Wow - I'd expect a dedicated member of the DD Central forum to want to investigate further, rather than write a comment like that! Never posted in DD, rarely read it unless I cant sleep I have zero interest in these accounts and they are of zero relevance You said RS had topped up the fund by £80m. They have not done anything of the sort. So your comment is untrue. They topped up about £15m to cover all the expected losses. Good on them I say! Perhaps you can do that with the funds you invested in Col? Nah, didnt think so Accounting semantics. I said that they had topped up their PF by £80M - by moving the exposure to their equity. Analysis above corroborates that. The actual losses could still be £60-90M. The difference between RS and these loans; and BM's positions in Col, is that all of our underlying loans are performing still in Col. "I have zero interest in these accounts and they are of zero relevance" - seriously; I'm debating with something who's *choosing* to be ignorant. I've missed this forum...
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Greenwood2
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Post by Greenwood2 on May 25, 2018 12:45:27 GMT
How do you know your underlying loans on Collateral are still performing? Information seems a bit thin on the ground on the Collateral Board, so if you have additional information I'm sure lenders on there would be very keen to hear it.
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jlend
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Post by jlend on May 25, 2018 13:23:50 GMT
Your last post (amusing as that may be) is not a serious attempt to justify your comments. So the honorable thing to do is to retract them. Your choice, for now. Wow - I'd expect a dedicated member of the DD Central forum to want to investigate further, rather than write a comment like that! So let's explore this, using only publicly available information: ADPOD: a £13-15M write-off so far - Sat with £15.4M of negative equity as at 31 March 2017: beta.companieshouse.gov.uk/company/09005743/filing-history- And a £13.8M impairment on Ratesetter as at 31 March 2017, with RS having made payments on Adpod loans from August 2016: beta.companieshouse.gov.uk/company/07075792 It is now a subsidiary, and Ratesetter has apparently injected further capital of £1.5M to prop it up. It is not clear if that is throwing good money after bad money. Time will tell. George Banco: accounts are less up to date. As at 31 Dec 2016 owed £31M - unclear what sort of recovery will come from this. Net liabilities of £3M. Vehicle Trading Group: beta.companieshouse.gov.uk/company/08395040/filing-history - See Administrators report: £1.5M still outstanding to RS. With just £2k collected from £5.9M of debtors. So possibly unlikely to get much more there(?). Its two subsidiaries were sold to Ratesetter Motor Ltd ( beta.companieshouse.gov.uk/company/10736638) which inherited £37M of debt (see 7.2 of Administrators update report). RML hasn't yet filed accounts - so unable to see consolidated performance of this new group. - Vehicle Credit Limited - one of its subsidiaries have accounts which are 5 months overdue: beta.companieshouse.gov.uk/company/07941730 That doesn't give me a warm fuzzy feeling though. If it was good news, I'd want to get it out asap. - Vehicle Stocking Limited - only has accounts made up until 31 Mach 2017 - before the restructuring: beta.companieshouse.gov.uk/company/07380405/filing-historySummary:ADPOD: £13-15M loss. George Banco: £3M exposure, potentially as high as £31M; unless it can trade its way out. VTG: £1.5M write off likely at parent company level; £37M exposure with an unknown outcome. Total: £17.5M-£19.5 already in the hole. Questions over a further £40M-68M. Either way, a potential £60M-90M (?) dodge for the PF.Of course, if you have better information, then I will be happy to revise my comments and analysis. Until then, this is a watching brief. There are a few things that have changed from what I have read unless I have misunderstood. For example the sale of the george banco loan book and the dispoal of the ad pod business etc. Here is the info on george banco as an example. We are pleased to announce that earlier today Non-Standard Finance Plc, a non-standard consumer finance specialist, confirmed that it was acquiring guarantor loans platform George Banco Limited for £53.5m. As part of the deal all George Banco loans will be refinanced by Non-Standard Finance Plc, and as a result RateSetter lenders will be repaid in full ahead of schedule. This is positive news for RateSetter because we have worked closely with the management team and the purchaser to ensure that the business has the support to move forwards, whilst making sure that our strategic focuses of ensuring that our lenders receive all their money back and winding up our wholesale lending are both accomplished. The deal is expected to complete in September 2017 or earlier. RateSetter previously provided wholesale finance to George Banco, and in May we announced that we had obtained a minority equity share of the business with the intention of changing the wholesale lending arrangement into one where RateSetter investors would lend directly to George Banco borrowers. However, after further examination, we concluded that we would not continue with this strategy as our development resources could be deployed more effectively to source other borrowers. The planned acquisition means that George Banco’s existing loans of £32m outstanding to RateSetter investors will be repaid in full ahead of schedule when the deal completes.
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dandy
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Post by dandy on May 25, 2018 13:41:36 GMT
There are a few things that have changed from what I have read unless I have misunderstood. For example the sale of the george banco loan book and the dispoal of the ad pod business etc. Here is the info on george banco as an example. Dont let facts get in the way jlend £80m sounds like a scary headline to us ignorant folk
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jlend
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Post by jlend on May 25, 2018 14:12:55 GMT
There are a few things that have changed from what I have read unless I have misunderstood. For example the sale of the george banco loan book and the dispoal of the ad pod business etc. Here is the info on george banco as an example. Dont let facts get in the way jlend £80m sounds like a scary headline to us ignorant folk RS have also said the vehicle loans are going in line with expectations the last time i saw them mentioned so i am not too worried about those unless i hear otherwise. Clearly RS made some mistakes, big mistakes, but i think they have done a reasonable job to get through them. They also have equity investors with deep pockets if needed without which i am not sure the outcome would be the same. Are they perfect ? No. Could the PF be better funded ? Yes. They have done a great job since i have been with them since 2010 in terms of protecting lender returns and capital. Of course past performance is no guarantee as we are continually reminded.
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