bg
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Post by bg on Feb 22, 2019 13:21:35 GMT
Very impressive instant diversification but I note that some of my money has been invested in a loan on which trading is suspended. Not so sure about that. On further inspection, an admittedly small amount has even been invested in the suspended M***** D*****ld! Aaargh! Having said that, I note this is also the case with the Quick Access Account so nothing new but certainly a question mark for another thread. Surely, new funds should not be going into suspended loans? Edit: Apologies, this was not new money but transferred money from the 30-day account so it was possibly already invested in those loans. I've only recently started with AC, and my brand new funds put into the QAA about a week ago bought up many pieces of "trading suspended" loans. Can't say I'm feeling too happy about that. I think you are misunderstanding how this account works. You are not stuck in any of these loans. As a test, withdraw all the money back to your cash account (either turn sweep off or click withdraw) and all your money will be returned. You can then put it back in and you will get the exact same allocations. These are only nominal loan holdings, no transactions are undertaken when you invest. They will not be crystallised unless there is a run on the account and AC can't fund withdrawals. In those circumstances the provision fund should cover any losses made in the loans you hold (well that's the theory).
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amwinv
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Post by amwinv on Feb 22, 2019 13:33:31 GMT
I've only recently started with AC, and my brand new funds put into the QAA about a week ago bought up many pieces of "trading suspended" loans. Can't say I'm feeling too happy about that. I think you are misunderstanding how this account works. You are not stuck in any of these loans. As a test, withdraw all the money back to your cash account (either turn sweep off or click withdraw) and all your money will be returned. You can then put it back in and you will get the exact same allocations. These are only nominal loan holdings, no transactions are undertaken when you invest. They will not be crystallised unless there is a run on the account and AC can't fund withdrawals. In those circumstances the provision fund should cover any losses made in the loans you hold (well that's the theory). But that's my point. its all "In theory". I know I have instant access... at the moment. But only as long as there is people to take my place afterwards. That can easily disappear. But that means there's still a risk I'm left tied into loans that were suspended long before I invested. So how is trading suspended if, in fact, I (and therefore everyone else) is continuing to be invested into them with only a "discretionary" provision fund as cover?
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n
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Yet another Nick
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Post by n on Feb 22, 2019 13:36:11 GMT
I am currently holding a balance from the promotion b4 last (for the second 1% cashback, payable in June) but have ignored the most recent promotion so not increased balances much since December. Now if I withdraw overall balances after 17 June (and after 23 May therefore) I would still qualify for cashback on this new account? My thinking is this if I add further funds now, it only extends that increased exposure until June and not until August - which is preferable.
Terms: Please correct me if I am wrong but it seems to me that the T&C state that any withdrawal from 90daa REQUESTED before May 24 will be deducted from the amount qualifying for the extra 1%, so you would still be exposed until August.
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Post by mrclondon on Feb 22, 2019 13:45:54 GMT
amwinv - only you can decide whether receiving 3 to 5% above BoE base rate is adequate compensation for the risks as you perceive them. The access accounts are structured as they are for regulatory reasons, and it is to AC's credit that they are sufficeintly transparent as to what that means in practise, to enable you to then take a view on the risk vs reward question.
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Post by chris on Feb 22, 2019 13:46:30 GMT
I think you are misunderstanding how this account works. You are not stuck in any of these loans. As a test, withdraw all the money back to your cash account (either turn sweep off or click withdraw) and all your money will be returned. You can then put it back in and you will get the exact same allocations. These are only nominal loan holdings, no transactions are undertaken when you invest. They will not be crystallised unless there is a run on the account and AC can't fund withdrawals. In those circumstances the provision fund should cover any losses made in the loans you hold (well that's the theory). But that's my point. its all "In theory". I know I have instant access... at the moment. But only as long as there is people to take my place afterwards. That can easily disappear. But that means there's still a risk I'm left tied into loans that were suspended long before I invested. So how is trading suspended if, in fact, I (and therefore everyone else) is continuing to be invested into them with only a "discretionary" provision fund as cover? Trading in suspended loans is only allowed in the access accounts whilst the provision fund has ring fenced funds to cover any expected losses of capital in those loans, i.e. the discretionary decision has been taken and the funds set aside.
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bg
Member of DD Central
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Post by bg on Feb 22, 2019 13:47:44 GMT
I think you are misunderstanding how this account works. You are not stuck in any of these loans. As a test, withdraw all the money back to your cash account (either turn sweep off or click withdraw) and all your money will be returned. You can then put it back in and you will get the exact same allocations. These are only nominal loan holdings, no transactions are undertaken when you invest. They will not be crystallised unless there is a run on the account and AC can't fund withdrawals. In those circumstances the provision fund should cover any losses made in the loans you hold (well that's the theory). But that's my point. its all "In theory". I know I have instant access... at the moment. But only as long as there is people to take my place afterwards. That can easily disappear. But that means there's still a risk I'm left tied into loans that were suspended long before I invested. So how is trading suspended if, in fact, I (and therefore everyone else) is continuing to be invested into them with only a "discretionary" provision fund as cover? Yes but that's the inherent risk of any provision fund....it's not 100% guaranteed to cover all possible losses, the only way it ever could if the provision fund was the same size of total loan holdings. It's not risk free. No form of investing ever is. Even FSCS savings can't be said to be 100% risk free as there is a risk the government does not stand behind it, albeit that risk is so small you could consider it non-existent. Trading is suspended in the suspended loans. You are not buying a direct holding in the loans in question but in effect a share of a fund that already holds those loans.
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rick24
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Post by rick24 on Feb 22, 2019 13:53:54 GMT
But that's my point. its all "In theory". I know I have instant access... at the moment. But only as long as there is people to take my place afterwards. That can easily disappear. But that means there's still a risk I'm left tied into loans that were suspended long before I invested. So how is trading suspended if, in fact, I (and therefore everyone else) is continuing to be invested into them with only a "discretionary" provision fund as cover? Trading in suspended loans is only allowed in the access accounts whilst the provision fund has ring fenced funds to cover any expected losses of capital in those loans, i.e. the discretionary decision has been taken and the funds set aside. That's a big positive as far as I am concerned.
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Post by chris on Feb 22, 2019 13:54:23 GMT
Trading is suspended in the suspended loans. You are not buying a direct holding in the loans in question but in effect a share of a fund that already holds those loans. This is not true. You are buying holdings in each of those loans. The system can produce a list of every single trade, every exchange, every transaction required to maintain the direct holdings that forms the loan agreements between individual lenders and borrowers.
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bg
Member of DD Central
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Post by bg on Feb 22, 2019 13:59:52 GMT
Trading is suspended in the suspended loans. You are not buying a direct holding in the loans in question but in effect a share of a fund that already holds those loans. This is not true. You are buying holdings in each of those loans. The system can produce a list of every single trade, every exchange, every transaction required to maintain the direct holdings that forms the loan agreements between individual lenders and borrowers. Yes but that's just an internal transaction within the 'fund' and amounts to the same thing.
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p2pete
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Post by p2pete on Feb 22, 2019 14:02:35 GMT
I have £10K in the "CHRISTMAS CRACKERS & SUMMER HOLIDAY CASHBACK". The summer payment is due in June I think.
Would I be better off withdrawing this (and losing the summer bonus) and then investing it in the 90DAA in my wife's account?
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Post by chris on Feb 22, 2019 14:03:33 GMT
This is not true. You are buying holdings in each of those loans. The system can produce a list of every single trade, every exchange, every transaction required to maintain the direct holdings that forms the loan agreements between individual lenders and borrowers. Yes but that's just an internal transaction within the 'fund' and amounts to the same thing. Technologically and legally it's not the same thing though, even if the end result to lenders ends up having parallels.
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Post by stuartassetzcapital on Feb 22, 2019 14:09:18 GMT
Very impressive instant diversification but I note that some of my money has been invested in a loan on which trading is suspended. Not so sure about that. On further inspection, an admittedly small amount has even been invested in the suspended M***** D*****ld! Aaargh! Having said that, I note this is also the case with the Quick Access Account so nothing new but certainly a question mark for another thread. Surely, new funds should not be going into suspended loans? Edit: Apologies, this was not new money but transferred money from the 30-day account so it was possibly already invested in those loans. I've only recently started with AC, and my brand new funds put into the QAA about a week ago bought up many pieces of "trading suspended" loans. Can't say I'm feeling too happy about that. Trading in loans in the access accounts is only possible if the potential loss is ring fenced within the PF.
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sl75
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Post by sl75 on Feb 22, 2019 14:13:22 GMT
Is an extra 0.65% worth waiting an extra 60 days (difference to 30DAA)? I suppose with the 1% and for the limited period between Feb 22 and August 22 (6 months) it's a '7.75%', +2.65% 'pa' over 6 months - dicounting the 'new money' angle. I think I am just saying that 30 days you can get used to but 90 days is pychologically a very big difference. (It just feels like a use once and throw away offering)
A lot depends on what you're comparing it to...
For the more traditional investment accounts, withdrawal times are highly unpredictable because they depend on the liquidity of the underlying assets, which may take anything between hours and years to fully liquidate. By comparison a reasonably certain 90 days "in normal market conditions" seems potentially quite attractive, and the headline interest rate is also pretty similar to the PSA and GBBA2.
chris perhaps you (and the rest of the AC team) could give serious consideration to later adding a "transfer to 90DAA" button to all the other investment accounts too? This would transfer the underlying assets held by the account (or a pro-rata portion of them if anything less than the full amount is transferred) into the QAA/30DAA/90DAA investment pool, and (for any loans that are blocked from trading) also do some behind-the-scenes accounting between the PF associated with the source account and the PF associated with the 90DAA.
There could even be an option to transfer some or all loans from the MLA, on payment of a transfer fee (deducted from the amount transferred) at least equivalent to the contributions that would have been made to the 90DAA's PF on the portfolio.
For the handful of investors who are seeking a definite exit, or whose investment preferences have changed such that they want to close one of the other investment accounts, this would allow any on-platform balance to be converted to something that they can liquidate within 90 days; an option that might be particularly useful for executors of a recently-deceased lender's estate, but which is likely to be useful in many other scenarios where investment preferences have changed, and especially where the perceived simplicity of the 90DAA appeals to the investor in question.
There's probably some limited potential for abuse, so fee structure and eligibility rules may need to be carefully considered, but last I checked, around 40% of AC's loan portfolio seemed to be in the QAA/30DAA pool, so transfers of a handful of "dodgy" portfolios would likely be a small drop in a very large ocean, and the benefit to the majority of investors who have portfolios that are merely "non-liquid" rather than definitively "dodgy" would seem to outweigh this.
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amwinv
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Post by amwinv on Feb 22, 2019 14:26:58 GMT
I appreciate all the replies, and especially the clarity from the AC team. It was just a little worrying starting off on a new platform and be immediately buying into crippled loans for 4.1%. I accept P2P is a risky venture, but I'm not sure that's a risk/reward ratio anyone would usually be willing to accept. Fingers crossed that provision fund doesn't hit some serious snags then, eh?  |
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jlend
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Post by jlend on Feb 22, 2019 14:32:24 GMT
I've only recently started with AC, and my brand new funds put into the QAA about a week ago bought up many pieces of "trading suspended" loans. Can't say I'm feeling too happy about that. Trading in loans in the access accounts is only possible if the potential loss is ring fenced within the PF. a useful future feature might be the ability to see how much of the provision fund is already ring fenced in each of the access accounts. Then there may be less nervousness.
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