|
|
Post by loadsamoney on Jul 7, 2018 5:53:30 GMT
I'm sure I can't be the only investor here who wishes that some power (FCA+HMRC?) could agree/impose standards on P2P providers re: terminology for and treatment of 'bad' loans.
My suggestion would be simple and logical:
1) 1 day to 1 month overdue = IN ARREARS, still counted as part of my investment*, still tradeable on SM (if there is one).
2) 1 month plus = DEFAULT, still counted as part of my investment, not tradeable on SM.
3) 2 months plus = IN RECOVERY, still counted as part of my investment, robust recovery action commences, not tradeable on SM.
4) End of tax year = DEDUCTIBLE LOSS, still counted as part of my investment, not tradeable on SM. Recovery action continues. Platforms obliged to publish total of such losses on website.
5) Recovery action exhausted = TOTAL LOSS, no longer counted as part of my investment, any recovered part liable for tax in year of recovery.
No other BS terminology should be allowed (e.g. non-performing, claims underway, and any others folks care to add below).
Two extremes in my experience:
Provider A: A loan on which payments had not been made for 6 months still marked as LATE, included in my investment total and tradeable on the SM, even though the borrower was in liquidation.
Provider B: A loan on which payments were a couple of months overdue, no recovery action commenced (although prospects for recovery deemed 'optimistic' by the platform), but immediately marked as a LOSS and deducted from my investment total (which in this case apparently prevents me from drawing any income until the 'LOSS' had been made up from interest). Trading on SM suspended.
Thoughts?
|
|
archie
Posts: 1,866 
Likes: 1,861
|
Post by archie on Jul 7, 2018 6:15:02 GMT
I don't think arbitrary timescales work here as each loan is different.
Default isn't necessarily the best option if other funds might be available to put the loan back on track. Certainly not based on a timescale.
A loan in recovery would normally be a deductible loss, fine line between definitions.
In arrears/Default/In recovery/Deductible loss/Total loss terminology could be standardised.
|
|
|
|
Post by loadsamoney on Jul 7, 2018 10:26:10 GMT
archie - I'm hardening my attitude about loans. I think two things: 1) A loan is a loan is a loan.
2) A loan is what you say it is on day one: £X for Y time.
There are occasionally legitimate exceptions where more forbearance may be sensible, but that should be strictly at the lenders' discretion, not that of the platform.
|
|
|
|
Post by loadsamoney on Jul 7, 2018 10:43:28 GMT
@wallstreet - I don't necessarily subscribe to all of the doom, gloom, panic and hysteria on these pages, but I certainly do detect a marked shift (for the worse) in the P2P market generally.
I am most definitely pulling back wherever I can, bit by bit; this feels like a time to hold cash to me.
I always start from my bottom line and work backwards. At present, I am more interested in capital preservation than growth or income, and for me averaging 4%pa on every penny I have will do that nicely. I hold at least as much cash in the bank (in various forms, currently earning an average 3%pa) as would keep me going for a couple of years. I uplift this by using P2P providers who offer maximum liquidity. Over time I have exploited to the max the silly bonus offers which have been kicking around to give me a bit more of a hedge against losses, so if need be I'm happy to dump loans and hold cash which isn't earning interest (albeit that it might be locked in for a period of time on some platforms), even to pay a small fee for the privilege.
Up to press, I have made reasonable money, but it wouldn't take much more of a shift to nullify that, or worse. And it is a poor rate of pay for the amount of work required to manage even a modest portfolio, let alone the worry.
But you are right: the FCA are a bunch of soft-dollies. Their 'FCA Handbook' is about as much use as a chocolate fireguard, even if they vigorously pursued compliance with it. The irony is that with a bit of a firmer hand, the Innovative Finance model could be the saviour of UK PLC when the buggers' muddle our government is going to make of Brexit hits home. As it is, I wouldn't mind betting that money is pouring out of the sector, never to return.
|
|
archie
Posts: 1,866
Likes: 1,861
|
Post by archie on Jul 7, 2018 11:15:22 GMT
archie - I'm hardening my attitude about loans. I think two things: 1) A loan is a loan is a loan.
2) A loan is what you say it is on day one: £X for Y time.
There are occasionally legitimate exceptions where more forbearance may be sensible, but that should be strictly at the lenders' discretion, not that of the platform. Fair enough. I either trust a platform or I don't. If they lose that trust I gradually withdraw. It's not really practical for lenders to decide as they don't have all the facts.
|
|
|
|
Post by loadsamoney on Jul 7, 2018 12:00:11 GMT
It's not really practical for lenders to decide as they don't have all the facts. Well, that's where the rot often sets in. If it really were P2P lending, there would be no excuse for the lender not to have all the facts; indeed, not having all the facts would be the best reason of all not to invest in the first place. But of course the market is moving inexorably away from a pure P2P model. Some platforms (not to be named by me) major on not providing all the facts; and at least one (which I won't have to name, because everyone will know which one I mean) do a pretty nice line in not having most of the facts themselves, right up to the point a humongous loan goes t**ts up, all unexpectedly, like ... There are odd exceptions: AC are pretty good at providing information, engaging with lenders here, and seeking lenders' views on options re: distressed loans. MT, in my brief experience, are pretty quick off the mark with recoveries where possible. GS so far have proven to be a pretty reliable hands-off option, with 30 day liquidity built in, maximum auto-diversity (in effect) and no fees. LW, fingers crossed, haven't let me down yet and seem to have reasonable protections in place. I wonder how many platforms would survive the BoE stress test? Not many, if any, I suspect. But a real-life stress test is surely coming. And who could pick out the winners and losers in advance? Longer-established, or bigger platforms you might think. But, in my experience, large, longer-established platforms are the ones with the mature (i.e. dodgy) loan books who have to pump out loans at a rate of knots just to stay afloat, where smaller ones who've maybe been around a couple of years still have relatively tidy loan books, and some measure of lender focus. All of which may mean nothing, come the day, of course.
|
|
