blender
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Post by blender on Jan 5, 2019 12:15:53 GMT
I joined FC in 2011 and had many years of good results, returns over 10%, up to the introduction of new fairer black-box FC, though it took some effort. At the start of 2018 I sold my loans and restarted as 'balanced', just to see if the set-and-forget FC would provide a modest return. I built it chunks to hold 400 loans. After a year, I have sold what I could and the results are in, using the tax statement for the period 6 Jan 18 to 5 Jan19:
Interest 2167 Fees 196 Losses in year 898 Lent but locked 745
Available cash 328
So, after a year I get to take out only £328 more, or 15% of the interest paid. As a standard rate tax payer I will get to pay £214, leaving me with £114 after tax. Wow!
But, I hear you say, some of the 'lent but locked', or late and live-but-risk-band-removed, will become available for sale, and there will also be recoveries from the losses in the year. Well maybe some, but not much, and it's in the future. What about recoveries from prior periods? Sorry, but that does not trouble the numbers because it is less than 50p. After 6.5 years, in Jan18, with a much larger account, my losses stood at £475 - and they have increased by £898 in a year on a smaller account. To be fair, I once bought and sold a lot of secured property loans.
So, what's the problem with FC, apart from fattening the loan book for the flotation of course?
As I see it the problem is with unsecured loans. If there is no security then due diligence and collections/recoveries must be sufficiently aggressive to convince borrowers that repayment is not optional, and PGs will be rigorously enforced. But there is only a sufficient margin for computerised due diligence and to chase a small portion of the loan book for payments. Once the credibility of collections/recoveries is in doubt the problem could grow and before they know it, it could be student loans all over again. So I am getting out of unsecured platforms.
One good thing - new FC is certainly fairer among its (remaining) lenders!
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mjc
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Post by mjc on Jan 5, 2019 12:20:48 GMT
That’s cured me for wanting to get into FC.
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blender
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Post by blender on Jan 5, 2019 13:21:53 GMT
That’s cured me for wanting to get into FC. Just one person's experience and opinion. Other views are expressed on the 'totally' thread. Mine was particularly about 2018. I will see how it stands in Jan 20 (dv). I look forward to being taken to task by mrclondon (whose knowledge and experience I respect) for comparing 2018 with past performance, rather than looking ten years ahead.
Anyway FC have done much better than the FTSE, though not much better than a good savings account.
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Post by argonaut on Jan 14, 2019 17:42:52 GMT
I have just been reviewing my accounts for last 7 months. I have been with FC since 2011. I have been using Balanced lending setting ( estimated 6 - 7% return). I am dismayed at the growing number of bad debts I have experienced in the period, and recoveries are minimal at 2 to 3 %. On one account I earned 1.6 % for 7 months. Another I earned 2%. Another account has earned 4%. I have reset my lending to Conservative lending ( estimated 5 to 5.5%).
Quite disappointing compared to previous years I have been with FC. Be warned.
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Post by argonaut on Jan 14, 2019 18:43:42 GMT
Over the years I noticed that FC was hit lending large amounts to legal firms with good credit and financial records. The legal firms would make a few
payments then terminate the business. Well I noticed another one a few weeks ago amongst my new bad debts! It is still surprising to me that a legal firm with good financials and credit record would suddenly go out of business after borrowing a large loan from FC then making a few payments.
Another large bad debt I had few weeks ago was to a retailer with good financials and credit record. They managed one payment before
stopping repayments. Oh, and the guarantor's property ( security) has meanwhile been transferred into someone else's name.
I have only given briefest details just for interest. In each case I felt dismayed at the size of the bad debts I was incurring and how easily
it occurred.
I have turned down my lending on FC to Conservative today. Fingers crossed that I can earn 5% as indicated.
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trevor
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Post by trevor on Jan 14, 2019 21:45:00 GMT
Given that I and all of you can get more than 5% on other p2p platforms either FC give me the projected 6-7% from balanced or my money goes elsewhere. Due to me experiencing similar issues to the above my non ISA account repayments are not currently being reinvested and going to other platforms, mainly RS 5 yr where all my recent investments since September have been 6.4% or above.
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dorset
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Post by dorset on Jan 15, 2019 9:27:03 GMT
Averaged about 1000+ loans during 2018 but steadily running loans out since 9/2017. Defaults at 102 for 2018 double any of my previous years. Interest earned in 2018 after fees and bad debts but including recoveries - £108. Could be much worse however, I could have joined in the FC IPO and lost about 25%!
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blender
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Post by blender on Jan 15, 2019 10:24:27 GMT
I think we have learned the true meaning of 'balanced', from a new ISA taken out in May/June. £20k went in over 500 loans (now). £19,900 could be taken out after selling (not actually done). The cash you have earned after defaults is approximately 'balanced' by the amount of cash locked up in late and downgraded loans. That cash, much of which will be lost, is fully included in the calculation of returns of 7%, proudly displayed. The formal losses are in the future.
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corto
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Post by corto on Jan 15, 2019 12:56:35 GMT
Same experience here.
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blender
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Post by blender on Jan 17, 2019 12:39:39 GMT
Just to give the figures on the ISA above (not the same account as the OP), in the hope that it might help others. It was a new balanced IFISA this tax year, and built to £20k to have good diversity with 500 loan parts now.
So far FC's summary says, in £,
Earnings 1350 Fees 132 Losses 397 Net earnings 821 Annualised return 6.6%
Which looks ok, but as Tonto used to say to the Loan Arranger 'Him speak with forked tongue'. If I tried to sell and exit today, with accrued interest, available cash, etc, I could take out £102 less than I put in. The cash locked in but not defaulted is:
One payment left 1 Processing 138 Downgraded live 148 Late 650 Total locked 937
Some of that will come back, but none of it is subtracted in the summary and the 'annualised return'. I await an analysis at the end of the tax year, but it seems I have wasted the IFISA allowance, and you can guess what Plan A is for 6 April.
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Post by carol167 on Jan 17, 2019 14:11:25 GMT
I think it says it all when the only chance of making much profit with FC is dependant on how good the recoveries are. That has certainly been my experience/conclusion after 5 years of trying (total max invested was 25k).
I sold all I could during the last month and am now just waiting for the trickle in over the next months (years) of what's locked in / being recovered. I do not plan to actively return to investing in FC.
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Stonk
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Post by Stonk on Jan 17, 2019 15:31:50 GMT
FC's calculation of your "annual return" figure is optimistic in every imaginable way. Wherever there was a choice about how to calculate it, they chose the way that makes it look most flattering. It is downright misleading. They should not be allowed to do it.
My quoted annual return figure has been consistently at least 1% above the true value that I am actually achieving.
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corto
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Post by corto on Jan 17, 2019 17:56:54 GMT
Just to give the figures on the ISA above (not the same account as the OP), in the hope that it might help others. It was a new balanced IFISA this tax year, and built to £20k to have good diversity with 500 loan parts now.
So far FC's summary says, in £,
Earnings 1350 Fees 132 Losses 397 Net earnings 821 Annualised return 6.6%
Which looks ok, but as Tonto used to say to the Loan Arranger 'Him speak with forked tongue'. If I tried to sell and exit today, with accrued interest, available cash, etc, I could take out £102 less than I put in. The cash locked in but not defaulted is:
One payment left 1 Processing 138 Downgraded live 148 Late 650 Total locked 937
Some of that will come back, but none of it is subtracted in the summary and the 'annualised return'. I await an analysis at the end of the tax year, but it seems I have wasted the IFISA allowance, and you can guess what Plan A is for 6 April.
For info: I had similar numbers promising a 7% annualised return on a lower total, a XIRR showing 5.5% (on my spreadsheets), and 4.5% of the total value locked in (with 1 processing loan only, all others late, bad debt or downgraded). That still may turn out positive over time.
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corto
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Post by corto on Jan 17, 2019 17:58:48 GMT
I think it says it all when the only chance of making much profit with FC is dependant on how good the recoveries are. That has certainly been my experience/conclusion after 5 years of trying (total max invested was 25k).
I sold all I could during the last month and am now just waiting for the trickle in over the next months (years) of what's locked in / being recovered. I do not plan to actively return to investing in FC.
Were the recoveries worth it?
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Post by carol167 on Jan 17, 2019 18:29:19 GMT
I think it says it all when the only chance of making much profit with FC is dependant on how good the recoveries are. That has certainly been my experience/conclusion after 5 years of trying (total max invested was 25k).
I sold all I could during the last month and am now just waiting for the trickle in over the next months (years) of what's locked in / being recovered. I do not plan to actively return to investing in FC.
Were the recoveries worth it? As far as I can tell I've had an average yearly return of 4.63% over 5 years. I have £360 locked in and bad debt minus recovered of £799 still outstanding.
I've decided it's not worth the return for the risk and I certainly did better in the first few years than I did in the last which might suggest going forward would continue downwards. As someone who relies on p-2-p income, FC has been unreliable month to month and I can, and do do, better elsewhere.
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