littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Aug 29, 2018 10:05:52 GMT
If you're trying to calculate Lendy's default rate, then shouldn't you include the successfully completed loan value on top of the live loans value? I think as you've got the historic defaults captured in the calculation then you should have historic re-paid to get the overall picture. I'm not saying this exonerates Lendy, but I think reality is less terrible than "46% default rate". If I've interpreted your methodology correctly (that's a big if!) and applied it to a hypothetical company that issued 100 loans of equal value, 98 of which paid back without issue, one loan is still running and performing and the remaining loan has defaulted. If you took a snapshot of the book using this methodology it would present the hypothetical company as having a 50% default rate, when historically it's only 1%. I'm not sure if any of that made sense, but to be clear I'm not defending Lendy; I exited Lendy a while ago when things started to scare me; consider me a concerned observer. IMO the proportion of the current loan book in default is a perfectly reasonable figure to calculate, if it is what it is and does not pretend to be the historic default rate. In the example above the firm is presumably winding up and so a high proportion of the residual loan book in default is to be expected. In a case like Lendy, still taking on new loans and AFAIK expanding such a high figure is a danger signal, to me at least.
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Post by p2plender on Aug 29, 2018 10:30:14 GMT
"But there is circa £100M in default."
Any idea if the PF will cover most of this?
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Post by sayyestocress on Aug 29, 2018 10:56:51 GMT
If you're trying to calculate Lendy's default rate, then shouldn't you include the successfully completed loan value on top of the live loans value? I think as you've got the historic defaults captured in the calculation then you should have historic re-paid to get the overall picture. I'm not saying this exonerates Lendy, but I think reality is less terrible than "46% default rate". If I've interpreted your methodology correctly (that's a big if!) and applied it to a hypothetical company that issued 100 loans of equal value, 98 of which paid back without issue, one loan is still running and performing and the remaining loan has defaulted. If you took a snapshot of the book using this methodology it would present the hypothetical company as having a 50% default rate, when historically it's only 1%. I'm not sure if any of that made sense, but to be clear I'm not defending Lendy; I exited Lendy a while ago when things started to scare me; consider me a concerned observer. IMO the proportion of the current loan book in default is a perfectly reasonable figure to calculate. It is what it is and does not pretend to be the historic default rate. In the example above the firm is presumably winding up and so a high proportion of the residual loan book in default is to be expected. In a case like Lendy, still taking on new loans and AFAIK expanding such a high figure is a danger signal, to me at least. The example I gave is purely hypothetical to show how the methodology used to get a 'default rate of 46%' can be misleading. I could come up with another example that would not look like the hypothetical company is 'winding up', it was just the simplest way I could demonstrate my issue with the maths used. The way the 46% has been talked about by the OP (at least the way it reads to me) implies that 46% of money lent through Lendy defaults, which is untrue. 46% is not the default rate, it is the amount of defaulted non-performing loans expressed as a percentage of the current live loans. I agree that as a measure it is concerning.
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wuzimu
Member of DD Central
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Post by wuzimu on Aug 29, 2018 10:58:17 GMT
I certainly accept 'drag' effects of defaulted loans etc which some might say I have not fairly accounted for.
Alot of that is due to lack of robust debt recovery action by Lendy ,
The numbers that really concern me are: Lendy claim they have paid £42,486k interest to lenders since they have started,
and right now there is £82,458k of loans in default.
in that case an average lender in every loan would find today they have £2 in defaulted loans for every £1 interest they have received
this reveals the consumer detriment for FCA to get their heads around
I will attempt to run that calculation for some other platforms. Would be interesting to compare.
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Post by sayyestocress on Aug 29, 2018 11:03:53 GMT
"But there is circa £100M in default."Any idea if the PF will cover most of this? I think I remember reading it was in the order of a couple of million, though this may have been some time ago.
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Post by sayyestocress on Aug 29, 2018 11:09:41 GMT
this reveals the consumer detriment for FCA to get their heads around
I was under the impression that the FCA don't police the performance of an investment. I guess if the complaint made to the FCA was that Lendy are misleading customers about the performance then there's grounds for complaint, but as long as Lendy keep kicking the multiple, very large cans down the road they can weasel themselves behind their claims.
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Post by cashmax on Aug 29, 2018 11:26:04 GMT
this reveals the consumer detriment for FCA to get their heads around
I was under the impression that the FCA don't police the performance of an investment. I guess if the complaint made to the FCA was that Lendy are misleading customers about the performance then there's grounds for complaint, but as long as Lendy keep kicking the multiple, very large cans down the road they can weasel themselves behind their claims. I would have thought that the questionable LTV rates vs valuations and the fact that Lendy are reserving the right to not crystallise a single loss (even when assets are sold and borrowers are broke) are the areas that the FCA should be concerned about.
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pom
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Post by pom on Aug 29, 2018 11:32:48 GMT
I find myself wanting to both agree and argue with you all here.
The default rate is actually pretty irrelevent, these are high risk loans, the default rate was always going to be high. And would cause no concerns at all for a platform with good recoveries. Problem is almost everyone sets too much store on patting themselves on the back on getting what they consider to be good loans in the first place (and I'm talking investors and platforms here) and not enough thinking about how well they will be recovered. And that's my biggest concern about Lendy and why even if I ever do get anything back from Exeter I won't go back. Whilst they've had successful repayments and recoveries which soon get forgotten about, they clearly have several nasties and I think are not helping themselves by delaying admitting losses....which then naturally makes us all suspicious about their confidence for other recoveries.
So yeah, default rate actually not that relevant...but the actual loss rate when we ever manage to work it out I suspect WILL be concerning for anyone still invested, particularly if overinvested
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Post by cashmax on Aug 29, 2018 11:37:04 GMT
I find myself wanting to both agree and argue with you all here. The default rate is actually pretty irrelevent, these are high risk loans, the default rate was always going to be high. And would cause no concerns at all for a platform with good recoveries. Problem is almost everyone sets too much store on patting themselves on the back on getting what they consider to be good loans in the first place (and I'm talking investors and platforms here) and not enough thinking about how well they will be recovered. And that's my biggest concern about Lendy and why even if I ever do get anything back from Exeter I won't go back. Whilst they've had successful repayments and recoveries which soon get forgotten about, they clearly have several nasties and I think are not helping themselves by delaying admitting losses....which then naturally makes us all suspicious about their confidence for other recoveries. So yeah, default rate actually not that relevant...but the actual loss rate when we ever manage to work it out I suspect WILL be concerning for anyone still invested, particularly if overinvested That's the main crux here thou isn't it. What if there never are any loses because Lendy leave everything in none performing / recoveries?
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wuzimu
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Post by wuzimu on Aug 29, 2018 11:40:44 GMT
FCA don't police investment performance. The are tasked with enforcing the FCA handbook and the FSMA2000 to maintain fair markets and prevent consumer detriment. The numbers for Lendy indicate a business model that makes Lendy plenty of money, but on average leaves lenders with losses (even if Lendy won't crystallize the loss)
consumers with comments about how they feel they have been treated can email FCA team working on P2P at
cp18-20@fca.org.uk
I have emailed them, FCA's attention is driven by numbers so if you are a Lendy lender I encourage you to email.
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pom
Member of DD Central
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Post by pom on Aug 29, 2018 12:20:22 GMT
I find myself wanting to both agree and argue with you all here. The default rate is actually pretty irrelevent, these are high risk loans, the default rate was always going to be high. And would cause no concerns at all for a platform with good recoveries. Problem is almost everyone sets too much store on patting themselves on the back on getting what they consider to be good loans in the first place (and I'm talking investors and platforms here) and not enough thinking about how well they will be recovered. And that's my biggest concern about Lendy and why even if I ever do get anything back from Exeter I won't go back. Whilst they've had successful repayments and recoveries which soon get forgotten about, they clearly have several nasties and I think are not helping themselves by delaying admitting losses....which then naturally makes us all suspicious about their confidence for other recoveries. So yeah, default rate actually not that relevant...but the actual loss rate when we ever manage to work it out I suspect WILL be concerning for anyone still invested, particularly if overinvested That's the main crux here thou isn't it. What if there never are any loses because Lendy leave everything in none performing / recoveries? Well investors will just have to work it out for themselves I guess as they are already trying to do so. But even so it's the partial recoveries which are of more interest than however we might define defaults. Which is probably still not pretty. Course it's easy for me to say that as I'm almost entirely out.
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empirica
Member of DD Central
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Post by empirica on Aug 29, 2018 12:56:17 GMT
FCA don't police investment performance. The are tasked with enforcing the FCA handbook and the FSMA2000 to maintain fair markets and prevent consumer detriment. The numbers for Lendy indicate a business model that makes Lendy plenty of money, but on average leaves lenders with losses (even if Lendy won't crystallize the loss)
consumers with comments about how they feel they have been treated can email FCA team working on P2P at
cp18-20@fca.org.uk
I have emailed them, FCA's attention is driven by numbers so if you are a Lendy lender I encourage you to email.
Really?
Is the emphasised snippet verifiable?
If not, on what basis is that a statement of fact?
[BTW - you might want to point out the context in which that team (as per their email address) uses any contact made with them: " We make all responses to formal consultation available for public inspection unless the respondent requests otherwise. We will not regard a standard confidentiality statement in an email message as a request for non-disclosure." (Source: FCA Website)]
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Post by cashmax on Aug 29, 2018 13:53:38 GMT
Lendy's current non-performing loan rate is 9.9%, which is in line with the P2P sector average.
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sydb
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Post by sydb on Aug 29, 2018 22:11:38 GMT
I have been with Lendy since end of 2016. About 50% of what I invested is now inaccessible; non-performing, defaulted or unsalable. Because of the often 1day notice of loans becoming available, and the lightning reaction to invest manually that required, my fault for most of that time was to trust the auto investment option. In hindsight, because of the tranche system, the auto investment option was obviously designed to go against the first rule of P2P which is to spread thinly across many different borrowers. This was the most underhand act of Lendy; an automatic system designed to go against diversification. I have since learnt not to trust any auto invest option of any P2P platform if there is a manual equivalent. I managed to sell some overweight loans but started doing so too late and now the situation with Lendy has clearly gone toxic. I have pulled everything I can out but I have made a massive loss.
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Post by p2plender on Aug 30, 2018 0:57:02 GMT
Let the ombudsman/FCA know your concerns.
I've reminded the FCA on several occasions they granted Lendy 'FCA approval'. Won't look good on their part in the future if the platform was to fail.
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