hazellend
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Post by hazellend on Apr 13, 2022 17:15:25 GMT
Cant believe that some people still think p2p is investable
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bugs4me
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Post by bugs4me on Apr 14, 2022 7:26:21 GMT
Cant believe that some people still think p2p is investable There is no point in my book. In the ‘old’ days loans offered at say 12% were fine provided the platform carried out full DD. In it’s simplest form assuming you invested say £100 across 20 loans then your total annualised return would be £240. If 5% or just 1 of the loans resulted in a 100% loss then your return would be halved to £120 resulting in a 6% return. Of course as time went on, I suspect my 5% is an underestimate. Several platforms became more greedy resulting in sloppy DD (to say the least) plus the lender was no longer the top consideration. Platforms introduced, usually under the radar, amended terms and conditions which allowed them to introduce ongoing monitoring fees, etc, etc. Even after a default had resulted, whether declared or not the platforms were not going to loose out so returns, if any, were vastly reduced. Many loans would not have proceeded in my view if the platforms had used their own money. Fast forward and assuming loan offerings at 5%, then your £2000 spread equally across 20 loans equates to a return of £100. One default and you’re effectively wiped out regarding returns. Of course once or if a platform goes into administration then you can kiss your a**e goodbye. P2P was great in the early days with many of the platforms operating within an acceptable degree of integrity. That integrity seemed to wane once the FCA got involved. Sure many folks knew P2P was a risk - fair enough. But the FCA authorisation ‘suckered’ in many lenders as it gave the platforms respectability. I was one of the fortunate investors that got out a while back with an acceptable return. My odd zombie loans with the likes of FS, LY, Col I’ve wiped off. Maybe one day the P2P industry will tidy things up but I’m not hopeful. Just my ramblings and all simple ‘fag packet’ figures above.
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adrianc
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Post by adrianc on Apr 14, 2022 7:32:41 GMT
P2P was great in the early days with many of the platforms operating within an acceptable degree of integrity. That integrity seemed to wane once the FCA got involved. Sure many folks knew P2P was a risk - fair enough. But the FCA authorisation ‘suckered’ in many lenders as it gave the platforms respectability. I think it was a bit simpler than that. The problem was that demand started to massively outstrip supply. Platforms simply could not find enough decent quality lenders to take the amount of money being waved at them. Headline returns fell. Even that didn't correct the imbalance, and loan quality fell. Then the sharks got interested - or, in several cases, people who had been running ostensibly decent platforms either turned out to be sharks or got greedy...
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corto
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one-syllabistic
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Post by corto on Apr 14, 2022 8:30:08 GMT
I would add incompetence as a factor
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Mousey
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Post by Mousey on Apr 14, 2022 9:16:50 GMT
P2P was great in the early days with many of the platforms operating within an acceptable degree of integrity. That integrity seemed to wane once the FCA got involved. Sure many folks knew P2P was a risk - fair enough. But the FCA authorisation ‘suckered’ in many lenders as it gave the platforms respectability. I think it was a bit simpler than that. The problem was that demand started to massively outstrip supply. Platforms simply could not find enough decent quality lenders to take the amount of money being waved at them. Headline returns fell. Even that didn't correct the imbalance, and loan quality fell. Then the sharks got interested - or, in several cases, people who had been running ostensibly decent platforms either turned out to be sharks or got greedy... bugs4me Hmmm the FCA knew exactly what the problems were but were in conflict with the treasury who wanted to push the shiny new product that was P2P. The burden of proof was on the FCA to decline Auth rather than on the firm to meet the conditions - much to the aggravation of one FCA risk manager: "The overall conclusion was that we all agree that PtP often does not provide a good proposition to both borrowers and retail investors, but the bar for rejecting applications is too high. EMO Legal basically advises against rejecting any of them given that we cannot substantiate that the business models are not sustainable" - Jan 2017 ------------ adrianc some very complicated risk studies was done by the FCA and the entire business model was deemed flawed. Two quotes from Feb 2017 sent by an FCA risk manager: "P2P is inherently very inefficient and uncompetitive when it comes to managing complex loan system risks." "In brief my consulting work [REDACTED] suggests that P2P loans systems expose consumers (mostly borrowers) to detriment and that the loan pricing and management market are very opaque and inefficient and thus do not meet FCA objectives implying they need to be substantially altered or wound down"
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