wuzimu
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Post by wuzimu on Sept 14, 2018 23:32:02 GMT
I managed to attend most of this event at the Ratesetter offices on Thursday pm. Management made 4 of us lenders welcome and appeared to be intent on explaining why the made changes to the platform in the summer and listening to the feedback we lenders had and answered all the questions squarely.
RS might publish some notes. I didn't take any notes, but I did learn a number of things about RS that I didnt appreciate before and now have a much fuller understanding of their situation.
If I can I will answer any questions that forum members have on topics that were discussed in the meeting....
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wuzimu
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Post by wuzimu on Sept 14, 2018 23:33:52 GMT
BTW ... For my part I went to tell RS that as a user of the rolling market I was not happy about the 14 day ban following a withdrawal as I use the market to park spare funds on a temporary basis.
A good discussion ensued about how the average age of loan they have exceeds a year, an obviously the borrowers rate is fixed. In that case RS are exposed to the fluctuations in cost of the lenders funds across all the markets. In the rolling market in particular RS were concerned that some lenders were gaming the market by withdrawing and directly reinvesting to take advantage of short term higher rates. This in effect costs RS money (as the avaerage cost of lenders money is raised) and this is why they introduced the 14 day ban to stamp this out.
We discussed whether a shorter period would be just as effective in meeting their aim and RS agreed a shorter period may well be effective and that the 14 day ban may be shortened to a lesser number of days.
I hope so, we'll see.
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Stonk
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Post by Stonk on Sept 15, 2018 1:25:55 GMT
We discussed whether a shorter period would be just as effective in meeting their aim and RS agreed a shorter period may well be effective and that the 14 day ban may be shortened to a lesser number of days.
A shorter period would surely achieve the objective. Imagine yourself in the position of having an existing Rolling investment at 3%, and you notice that the market is currently matching at 4%. Without a ban, there is little to stop you from selling and immediately reinvesting. But ask yourself: how certain am I that in N days time rates will not have dropped back down to 3%, or lower? Given how quickly rates can change, I suspect even a ban of 2 or 3 days (long enough to exceed a weekend) would probably be a enough of a deterrent.
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spiral
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Post by spiral on Sept 15, 2018 7:35:21 GMT
Given how quickly rates can change, I suspect even a ban of 2 or 3 days (long enough to exceed a weekend) would probably be a enough of a deterrent. In many instances an hour would suffice.
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josephg
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Post by josephg on Sept 16, 2018 19:28:34 GMT
A good discussion ensued about how the average age of loan they have exceeds a year, an obviously the borrowers rate is fixed. In that case RS are exposed to the fluctuations in cost of the lenders funds across all the markets. In the rolling market in particular RS were concerned that some lenders were gaming the market by withdrawing and directly reinvesting to take advantage of short term higher rates. This in effect costs RS money (as the avaerage cost of lenders money is raised) and this is why they introduced the 14 day ban to stamp this out. Borrowers in the short term market should be aware that short term rates could go up or down. Why would lenders want to enter short term markets, if they can't take advantage of short term higher rates? If the average age of loan in the rolling market exceeds one year, shouldn't those be on the one year or longer markets? Sounds like RS are gaming the market. They need to get their business tactics in order, or they will continue losing lenders. Transparency is essential. I started withdrawing last year. RS were great when they started. They started breaking promises the very next year. Then they started squeezing lenders to profit themselves.
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wuzimu
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Post by wuzimu on Sept 17, 2018 11:17:11 GMT
RS does not have separate pools of loans for each lending market.
All borrower loans are cross-collatoralized from the perspective of lenders no matter which lending market you lend in.
The borrowers cost of loan is fixed at the time they get their loan offer. To the extent any particular loan is supported by funds lent in the rolling market or to a lesser extent the 1 yr market, RS do not know exactly what the lifetime cost of money will be to support any given loan they have written if the lenders (thats us) were to cash out, then return to the market a little later when lender rates have risen. It's RS margins that are exposed to such 'churn' of lender funds. That is why RS want to match lenders funds for the life of a borrowers loan as it reduces RS exposure to changes in the cost of capital.
The 14 day lock out in the rolling market is designed to reduce 'churn' and I'm sure will have that effect.
It might also have the effect of reducing the amount lenders commit to that market as dipping in and out was an attractive aspect for certain types of lender.
And RS do want more lender cash on the platform.
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lara
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Post by lara on Sept 17, 2018 13:10:05 GMT
RS does not have separate pools of loans for each lending market.
All borrower loans are cross-collatoralized from the perspective of lenders no matter which lending market you lend in.
The borrowers cost of loan is fixed at the time they get their loan offer. To the extent any particular loan is supported by funds lent in the rolling market or to a lesser extent the 1 yr market, RS do not know exactly what the lifetime cost of money will be to support any given loan they have written if the lenders (thats us) were to cash out, then return to the market a little later when lender rates have risen. It's RS margins that are exposed to such 'churn' of lender funds. That is why RS want to match lenders funds for the life of a borrowers loan as it reduces RS exposure to changes in the cost of capital.
The 14 day lock out in the rolling market is designed to reduce 'churn' and I'm sure will have that effect.
It might also have the effect of reducing the amount lenders commit to that market as dipping in and out was an attractive aspect for certain types of lender.
And RS do want more lender cash on the platform.
I understand the rationale for matching borrowers to lenders for the lifetime of the loan, I also understand the rationale behind the 14 day ban. And I dislike both of them enough, not to have been tempted to return my money to the platform. (money which I immediately removed upon finding out about the June shenanigans) I have a tiny amount in there just in case things turn for the better again but it doesn't look like that is ever going to happen.
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mark123
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Post by mark123 on Sept 17, 2018 13:13:07 GMT
RS does not have separate pools of loans for each lending market. My understanding from the Q&A event is that: 1. The rolling, one-year and five year markets operate independently; they are allocated to different sources of loan 2. RS state that they do NOT (as is often suggested on this forum) ever choose to repay a lender early so they can re-fund the loan at a lower rate
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mark123
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Post by mark123 on Sept 17, 2018 13:45:15 GMT
Personal impression of the Q&A event from one of four participants...
I thought that RS fielded three capable and informed people with the intention of engaging openly with forum members in the hope that we will post information on the forum (as they believe the previous Kevin level of RS posting is not possible in today's regulatory environment).
They appeared to me to answer every question fully and I did not detect any evasiveness or lack of knowledge.
They clearly care about the views of their lenders & borrowers and they monitor the forum closely.
They seemed to be thoughtful about how the platform operates and I do not believe they implement changes without thinking through the consequences and alternatives.
My impression is that their main concern is the long-term future of the platform. For example, they need to grow lending volumes over the next few months so income exceeds overheads but they said they do not have a lending target as this could lead to them taking on poor quality loans.
So, in summary, my trust in RS ability, openness and resilience was enhanced by the meeting and I will continue to invest >10% of my pension on the platform (if 5-year rates remain at their recent level).
Mark
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Post by oppsididitagain on Sept 17, 2018 15:27:20 GMT
I Also was present at the meeting. I found RS to be very professional and very open and happy to answering all questions posed too them.
The meeting lasted for about 2.5hrs, not the 1.5 they had allowed so this gave me confidence that they did want to listen to us and happy to talk about idea's and suggestions, and not just get us out the door ASAP.
John from RS said when he gets a moment he will post some of the minutes/Q&A's. raised the meeting.
As an Investor I'm disappointed the way the rolling now works, as now you are locked into the rate for the life of the loan. In effect the rolling works like the 5 year, but your capital is not penalised for early withdrawal. However, The rolling market doesn't show you the length of the loan pre matching, its only after the loan has formed you know the final repayment date. So you could get that rate for 6 months upto 48months.
As a business model I completely understand why RS changed the way Rolling works, as they need to stabalise their margins to make money.
Something that will be interesting in a year or so, once the loans that have been matched in the last 2 months start to pay down, the monthly loan size repayments could get quite small. This might lead to a lot of repayments being less that £10 and balances in holding/reinvestment account being useless until the total is above £10. Im sure RS will post something to explain this.
All in All a good meeting
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lara
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Post by lara on Sept 17, 2018 15:40:06 GMT
I Also was present at the meeting. I found RS to be very professional and very open and happy to answering all questions posed too them. The meeting lasted for about 2.5hrs, not the 1.5 they had allowed so this gave me confidence that they did want to listen to us and happy to talk about idea's and suggestions, and not just get us out the door ASAP. John from RS said when he gets a moment he will post some of the minutes/Q&A's. raised the meeting. As an Investor I'm disappointed the way the rolling now works, as now you are locked into the rate for the life of the loan. In effect the rolling works like the 5 year, but your capital is not penalised for early withdrawal. However, The rolling market doesn't show you the length of the loan pre matching, its only after the loan has formed you know the final repayment date. So you could get that rate for 6 months upto 48months. As a business model I completely understand why RS changed the way Rolling works, as they need to stabalise their margins to make money. Something that will be interesting in a year or so, once the loans that have been matched in the last 2 months start to pay down, the monthly loan size repayments could get quite small. This might lead to a lot of repayments being less that £10 and balances in holding/reinvestment account being useless until the total is above £10. Im sure RS will post something to explain this. All in All a good meeting Did they explain why they weren't honest about the reason for the change to begin with and why they tried to sneak it by without a proper announcement at the time?
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wuzimu
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Post by wuzimu on Sept 17, 2018 17:58:18 GMT
I think part of the reason for the Q&A event was to help convey the reasons for the changes to the RS platform.
Because wth hindsight RS may have come to see there was a PR deficit on their part prior to the changes, but the meeting did not discuss if there was any malevolent intent connected with said PR deficit.
I dont think there was malevolent intent.
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tyrex
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Post by tyrex on Sept 17, 2018 19:17:41 GMT
Indeed, it's just business. They are looking after their business, we have to look after ours (which includes leaving if it no longer works for us).
To be fair, their numbers at Companies House don't exactly look pretty, so I imagine that these changes were a necessity.
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oik
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Post by oik on Sept 17, 2018 21:12:14 GMT
I thought that RS fielded three capable and informed people with the intention of engaging openly with forum members in the hope that we will post information on the forum (as they believe the previous Kevin level of RS posting is not possible in today's regulatory environment). I think we can all guess why they wanted to speak directly to eight lenders that they would be in a position to select or reject on the basis of their posting to this board. In the event, they weren't able to make that selection as there were only four willing to attend. Did they say at what point they decided that regulations prevented their representative from posting here as they suggest they would wish? Was it when Kevin left their employ or more recently and what reason was given for them being unable to engage to the same extent as the Assetz representative for example? Did they explain who makes the "Borrower Offers" and if it isn't the Borrowers why they continue to mislead new lenders with the use of that term? They seemed to be thoughtful about how the platform operates and I do not believe they implement changes without thinking through the consequences and alternatives. In which case I'm left wondering why after implementing a very significant change to their terms (that they failed to properly give notice of to lenders) that they were then obliged to reverse that position just two weeks later. The subsequent headless chicken impression suggests they gave it substantially less thought than needed.
I think I'd need a little more "openness" than they seem to have shown to be frank, which they need to demonstrate, not just mouth the words.
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lara
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Post by lara on Sept 18, 2018 7:50:49 GMT
I think part of the reason for the Q&A event was to help convey the reasons for the changes to the RS platform.
Because wth hindsight RS may have come to see there was a PR deficit on their part prior to the changes, but the meeting did not discuss if there was any malevolent intent connected with said PR deficit.
I dont think there was malevolent intent.
A PR deficit? That has to be the understatement of the year! Again, I don't see how having a meeting with a tiny handful of investors was supposed to convey anything to the rest of us who weren't prepared to, or able to take a day out of our lives to travel to London. And don't forget about all of those investors who don't even know that this forum exists.
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