tony
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Post by tony on Nov 15, 2018 15:20:28 GMT
I posted this on the wrong page - it should have been here!
I emailed FS this morning and received what I consider to be an unsatisfactory reply - do any other forum members agree that the description "six months term" is misleading and should not be used when FS invite investors to lend in a newly announced new loan? Here is both my question and their reply:
MY QUESTION
Good morning,
Please tell me why you always state that a loan term is six months. I can't remember when any loan in my portfolio was repaid at the expiry of the six month period - they all appear to be extended for a further period and this extension can be repeated time and time again resulting in my investments being tied up indefinitely. As your use of the term "6 month term" can mislead lenders, particularly unsophisticated lenders, I suggest that you replace it with the words "indefinite term" so that investors are more aware of the fact that they may not see their money returned for perhaps several years.
I am surprised that the FCA allow you to use such misleading terminology.
Your comments will be appreciated.
REPLY
Good afternoon,
Thank you for your feedback, I have noted your comments and I will pass them onto management.
We are aware that we have overdue loans and updates have not been posted as regular as they should be which is why we are looking at new procedures and we also have additional staff starting in the next month which will improve the investor experience. Unfortunately the changes will not happen overnight but I can assure you that there will be improvements in the near future. Unfortunately some loans do overrun especially when legals and paperwork is involved, you do still accrue interest daily up until the loan is closed/complete.
If I can be of any further assistance, please do not hesitate to contact us.
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adrian77
Member of DD Central
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Post by adrian77 on Nov 15, 2018 16:03:19 GMT
tell that to the people who have lost 100% of their capital with no interest e.g. Wimbledon!
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Post by investor1925 on Nov 15, 2018 16:03:59 GMT
I posted this on the wrong page - it should have been here!
I emailed FS this morning and received what I consider to be an unsatisfactory reply - do any other forum members agree that the description "six months term" is misleading and should not be used when FS invite investors to lend in a newly announced new loan? Here is both my question and their reply:
MY QUESTION
Good morning,
Please tell me why you always state that a loan term is six months. I can't remember when any loan in my portfolio was repaid at the expiry of the six month period - they all appear to be extended for a further period and this extension can be repeated time and time again resulting in my investments being tied up indefinitely. As your use of the term "6 month term" can mislead lenders, particularly unsophisticated lenders, I suggest that you replace it with the words "indefinite term" so that investors are more aware of the fact that they may not see their money returned for perhaps several years.
I am surprised that the FCA allow you to use such misleading terminology.
Your comments will be appreciated.
REPLY
Good afternoon,
Thank you for your feedback, I have noted your comments and I will pass them onto management.
We are aware that we have overdue loans and updates have not been posted as regular as they should be which is why we are looking at new procedures and we also have additional staff starting in the next month which will improve the investor experience. Unfortunately the changes will not happen overnight but I can assure you that there will be improvements in the near future. Unfortunately some loans do overrun especially when legals and paperwork is involved, you do still accrue interest daily up until the loan is closed/complete.
If I can be of any further assistance, please do not hesitate to contact us.
After 6 months: The borrower has the option of extending the loan for 6 more months after paying the next 6 months interest, paying the loan back, or deliberately defaulting the loan whereupon it will be sold. The lender (us) has the option of renewing the loan or cashing out (after the loan is renewed). The problem I see is that if the borrower can't pay after the 6 month period, but still wants to continue with the finance, they waffle on to FS in an attempt to extend it and get themselves out of the financial hole they are in. FS will go along with this for a while before defaulting & selling the asset. Unfortunately the "while" can end up being a long while. My opinion is that FS should default loans sooner than they are doing, so we'll all be happier investors.
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arby
Member of DD Central
Posts: 910
Likes: 959
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Post by arby on Nov 15, 2018 16:40:04 GMT
I posted this on the wrong page - it should have been here!
I emailed FS this morning and received what I consider to be an unsatisfactory reply - do any other forum members agree that the description "six months term" is misleading and should not be used when FS invite investors to lend in a newly announced new loan? Here is both my question and their reply:
MY QUESTION
Good morning,
Please tell me why you always state that a loan term is six months. I can't remember when any loan in my portfolio was repaid at the expiry of the six month period - they all appear to be extended for a further period and this extension can be repeated time and time again resulting in my investments being tied up indefinitely. As your use of the term "6 month term" can mislead lenders, particularly unsophisticated lenders, I suggest that you replace it with the words "indefinite term" so that investors are more aware of the fact that they may not see their money returned for perhaps several years.
I am surprised that the FCA allow you to use such misleading terminology.
Your comments will be appreciated.
REPLY
Good afternoon,
Thank you for your feedback, I have noted your comments and I will pass them onto management.
We are aware that we have overdue loans and updates have not been posted as regular as they should be which is why we are looking at new procedures and we also have additional staff starting in the next month which will improve the investor experience. Unfortunately the changes will not happen overnight but I can assure you that there will be improvements in the near future. Unfortunately some loans do overrun especially when legals and paperwork is involved, you do still accrue interest daily up until the loan is closed/complete.
If I can be of any further assistance, please do not hesitate to contact us.
If you don't repay your interest only mortgage at term then the house isn't immediately repossessed and the lender has to wait an indefinite amount of time to get the money back. This is the same. While this principle is obvious to institutional lenders, it may not be obvious to some more casual investors so I'd agree that it could be made clearer. However, it is explained on the FS site for all to see, but does that suffice??
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tony
Posts: 136
Likes: 91
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Post by tony on Nov 15, 2018 16:54:44 GMT
Yes I agree that the procedure is explained in the small print but now that the current buzz word is "transparency" I think the use of the term "six month term" is deliberately misleading to new investors. Why is it used? - it tells the potential investor nothing meaningful as far as I can see. We all need to be provided with a realistic idea of when we can expect to get our money back. OK I know that P2P can't be used as an instant access account but some of us who are long in the tooth have a limited time available to reap any rewards that may be due to us!
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Post by slender on Nov 15, 2018 17:42:48 GMT
Yes I agree that the procedure is explained in the small print but now that the current buzz word is "transparency" I think the use of the term "six month term" is deliberately misleading to new investors. Why is it used? - it tells the potential investor nothing meaningful as far as I can see. We all need to be provided with a realistic idea of when we can expect to get our money back. OK I know that P2P can't be used as an instant access account but some of us who are long in the tooth have a limited time available to reap any rewards that may be due to us! The stats page does that, I think?
It implies / I've inferred that 80% of FS' loans repay on or around the 6m mark.
Or, one-in-five don't.
And those that don't can take years.
So, don't invest any money in FS-type loans that you might need in any foreseeable timescale.
(Or am I over-simplifying things?)
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mjc
Member of DD Central
Posts: 342
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Post by mjc on Nov 15, 2018 20:11:58 GMT
I take all I read from FS with a truck load of salt.
I invested £50k between Jan and March 2018. I have been selling since July. I now have £21k in over due loans. I will have to wait some time to find out if I will break even or better. I wish I had found the warnings of the dire FS performance on this forum earlier.
I wish FS would give more detailed information on what % are paid ON or before, within 1m, 6m 1yr etc. But I conclude the correct figures would be negative for their marketing. I’m hopeful the FCA review will force all platforms to publish directly comparable statistics on returns. 🙏
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trium
Member of DD Central
Posts: 384
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Post by trium on Nov 15, 2018 20:12:25 GMT
I don't see what is misleading about a six-month term being described as a six-month term. Some borrowers stretch this out (understatement) but it's still a six-month term and is correctly described.
We might want to look at what can be done to reduce the number of overdue loans. Maybe 12-month loans on property devs might help. How about automatic default pricing (say +3%) on overdue loans. Maybe refuse additional tranches/supplementaries while renewals await attention.
Removal of SM restrictions, while not affecting the rate of overdues, would at least allow adventure-seekers to come to the aid of the risk-averse.
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arby
Member of DD Central
Posts: 910
Likes: 959
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Post by arby on Nov 15, 2018 20:49:51 GMT
I take all I read from FS with a truck load of salt. I invested £50k between Jan and March 2018. I have been selling since July. I now have £21k in over due loans. I will have to wait some time to find out if I will break even or better. I wish I had found the warnings of the dire FS performance on this forum earlier. I wish FS would give more detailed information on what % are paid ON or before, within 1m, 6m 1yr etc. But I conclude the correct figures would be negative for their marketing. I’m hopeful the FCA review will force all platforms to publish directly comparable statistics on returns. 🙏 As pointed out above, they provide all the information for you to determine whatever you need to calculate. When it comes to spoon feeding us, I would personally choose default recovery rates over repayment timeliness as a much more important factor, and that's the problem, every one of us may want something slightly different. It was made clear that repayment isn't guaranteed at 6 months and that's just the nature of investing in this market.
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Post by dan1 on Nov 15, 2018 20:58:04 GMT
Yes I agree that the procedure is explained in the small print but now that the current buzz word is "transparency" I think the use of the term "six month term" is deliberately misleading to new investors. Why is it used? - it tells the potential investor nothing meaningful as far as I can see. We all need to be provided with a realistic idea of when we can expect to get our money back. OK I know that P2P can't be used as an instant access account but some of us who are long in the tooth have a limited time available to reap any rewards that may be due to us! The stats page does that, I think?
It implies / I've inferred that 80% of FS' loans repay on or around the 6m mark.
Or, one-in-five don't.
And those that don't can take years.
So, don't invest any money in FS-type loans that you might need in any foreseeable timescale.
(Or am I over-simplifying things?)
The stats page states that 80.1% of loans have been repaid as at end of October. It does not provide an indication of when loans were repaid. According to the All active and past loans page (see analysis on the thread here): - 51.9% of loans by value were repaid on/before the due date - 56.3% of loans by number were repaid on/before the due date These figures include defaulted loans but exclude cancelled loans. Correct as at 10 November. To be honest the figures are far better than I was expecting 
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Post by df on Nov 15, 2018 21:51:23 GMT
The stats page does that, I think?
It implies / I've inferred that 80% of FS' loans repay on or around the 6m mark.
Or, one-in-five don't.
And those that don't can take years.
So, don't invest any money in FS-type loans that you might need in any foreseeable timescale.
(Or am I over-simplifying things?)
The stats page states that 80.1% of loans have been repaid as at end of October. It does not provide an indication of when loans were repaid. According to the All active and past loans page (see analysis on the thread here): - 51.9% of loans by value were repaid on/before the due date - 56.3% of loans by number were repaid on/before the due date These figures include defaulted loans but exclude cancelled loans. Correct as at 10 November. To be honest the figures are far better than I was expecting I expected the figures to be worse. I guess timely renewals are treated as repaid?
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Post by dan1 on Nov 15, 2018 22:27:36 GMT
The stats page states that 80.1% of loans have been repaid as at end of October. It does not provide an indication of when loans were repaid. According to the All active and past loans page (see analysis on the thread here): - 51.9% of loans by value were repaid on/before the due date - 56.3% of loans by number were repaid on/before the due date These figures include defaulted loans but exclude cancelled loans. Correct as at 10 November. To be honest the figures are far better than I was expecting I expected the figures to be worse. I guess timely renewals are treated as repaid? Yup. I'll try and generate some pretty (subjective!) graphs of number of days to complete vs cumulative % (i.e. a CDF) with traces for the year cohorts and all years. Both for loans by value and by number, and with and without renewals. That should keep me out of trouble for a couple of hours
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Godanubis
Member of DD Central
Anubis is known as the god of death and is the oldest and most popular of ancient Egyptian deities.
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Post by Godanubis on Nov 15, 2018 22:55:13 GMT
Good work again thanks. If interest were to be compounded after the due date that would be a little bit of a help.
As I have said many times before, count every investment as a 24 month investment and only look at it after that time (As many P2P loans on other platforms are years of commitment)
By doing that and taking a holistic approach on your total investments you will always be a winner (with maximum diversification)
Nobody has yet shown me an overall loss using this strategy.
Perhaps if you have any spare time you could give us the stats for £100 invested in every loan from (£10000 pot to start) over the last 3yrs what would have been the return if returns were reinvested .
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Post by df on Nov 15, 2018 22:55:34 GMT
I don't see what is misleading about a six-month term being described as a six-month term. Some borrowers stretch this out (understatement) but it's still a six-month term and is correctly described. We might want to look at what can be done to reduce the number of overdue loans. Maybe 12-month loans on property devs might help. How about automatic default pricing (say +3%) on overdue loans. Maybe refuse additional tranches/supplementaries while renewals await attention. Removal of SM restrictions, while not affecting the rate of overdues, would at least allow adventure-seekers to come to the aid of the risk-averse. I never thought of this part as misleading. It's a standard pawn term. The borrower has a choice of either to pay 6 month interest and renew or repay in full or the security will be sold. There is usually some grace period on payments. Not sure if this is an appropriate model for property lending, but it works for me - I like the flexibility to get out in 6 month instead of being stuck with the loan for years. 12-months term loans on FS would be undesirable for me. "Automatic default pricing" is good in theory (MT does this and Ly use bonus system), but in practice in most cases you are looking at partial capital repayment as a good outcome. There are exceptions, but normally it doesn't get as far as accrued interest/bonus. I agree, in current condition relaxing discount limits could help.
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Post by dan1 on Nov 15, 2018 23:09:45 GMT
Good work again thanks. If interest were to be compounded after the due date that would be a little bit of a help.
As I have said many times before, count every investment as a 24 month investment and only look at it after that time (As many P2P loans on other platforms are years of commitment)
By doing that and taking a holistic approach on your total investments you will always be a winner (with maximum diversification)
Nobody has yet shown me an overall loss using this strategy.
Perhaps if you have any spare time you could give us the stats for £100 invested in every loan from (£10000 pot to start) over the last 3yrs what would have been the return if returns were reinvested .
You have to make assumptions with respect to the repayments/recovery of defaulted and overdue loans. I tried something similiar here (2nd chart, equal investment in every loan). Compound interest is a step too far for me at this stage and I think it'll be a second order effect anyway across the relatively short time period (5 years odd but very few loans in the first couple of years in comparison to the last 3 years).
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