Post by blender on Oct 5, 2014 13:25:43 GMT
What do we think about the change to the advertised returns on FC? 'You can earn a current estimated return of 7.2% per year' it now says and this is based on the rates agreed for the last 100 loans, compounded and then adjusted for fees and anticipated loss rates.
The P2P marketplace is now very competitive and presumably FC do not wish to be held back in their advertising by the 6.7% based on historical actual performance of a certain group of lenders. FC are leaving the actuals to the stats page, and going forward with the net-before-tax equivalent of the old gross forecast (remember the 9.1%?). It makes marketing sense in that it avoids the actual figures being unduly lowered by the poor rates achieved in 2013. But now it is based partly on actuals, ie the rates agreed in current auctions, and partly on forecasts, in the compounding and the predicted future losses. So a bit of a hybrid figure, and tricky as always because standard rate tax payers pay more than 20% of the earnings - because of the losses. But FC does really need to advertise the best figure it can to attract new lenders.
There is a problem with such a small number of current loans as the basis of the number, because it will be dynamic and unstable. If you look at the rates for whole loans, calculated in a similar manner, they move around. And you cannot really have a number which is based on current performance, say moving average over two weeks, and then footnote it as figure correct as of some time in the past. If it is presented as current it should be current, updated daily as FC state they will.
Personally I am pleased this move has been made, despite the problems. There will be other views.
The P2P marketplace is now very competitive and presumably FC do not wish to be held back in their advertising by the 6.7% based on historical actual performance of a certain group of lenders. FC are leaving the actuals to the stats page, and going forward with the net-before-tax equivalent of the old gross forecast (remember the 9.1%?). It makes marketing sense in that it avoids the actual figures being unduly lowered by the poor rates achieved in 2013. But now it is based partly on actuals, ie the rates agreed in current auctions, and partly on forecasts, in the compounding and the predicted future losses. So a bit of a hybrid figure, and tricky as always because standard rate tax payers pay more than 20% of the earnings - because of the losses. But FC does really need to advertise the best figure it can to attract new lenders.
There is a problem with such a small number of current loans as the basis of the number, because it will be dynamic and unstable. If you look at the rates for whole loans, calculated in a similar manner, they move around. And you cannot really have a number which is based on current performance, say moving average over two weeks, and then footnote it as figure correct as of some time in the past. If it is presented as current it should be current, updated daily as FC state they will.
Personally I am pleased this move has been made, despite the problems. There will be other views.
