Will P2P in the UK have changed considerably within 2 years?
Jun 3, 2019 12:36:21 GMT
ozboy, macq, and 1 more like this
Post by bigfoot12 on Jun 3, 2019 12:36:21 GMT
Are we seeing the start of some real change in the P2P landscape, or the natural collapse of the weaker members of well functioning sector?
It is easy to dismiss the collapse of both Collateral and Lendy as the latter - both made basic mistakes and failed. But I suspect that we are seeing the start of something bigger.
If nothing else the publicity of the above two (thread) might cause some of those using P2P as a savings account to think again. If they log into their site and find that, whilst not listed in default in the jolly monthly email, perhaps 10% or 20% of their investment is locked in, not able to be withdrawn. If the use FC the waiting list to withdraw now exceeds 50 days and this is one of the largest platforms; what will they think then?
Experts have been taking some stick in the past few years, but several have now abandoned P2P. In 2016 VSL stopped new investments in P2P, 2017 P2PGI joined them, and now incredibly FC's own IT is holding a vote on doing the same. Not quite the same but BondMason's recent decision also suggests that the risk/reward of P2P might not be there, at least in the small scale of most platforms.
I would be surprised if the FCA didn't restrict P2P to High Net Worth Investors (HNWI) or Sophisticated Investors (SI). They were consulting on doing this, and then Collateral and Lendy have collapsed with bad publicity. It is hard to judge how a small number of active members of this forum would be reflective of the wider investor base, but some seem to have made a number of complaints. Perhaps the complaints are justified and retail investors need to be shielded from shady or incompetent managers; perhaps the complaints are not justified and demonstrates that retail investors don't really understand the risks that they are taking. Either way the FCA might (should in my view) decide that restricting P2P to HNWI or SI is the only route.
When Lendinvest decided to withdraw its P2P application and restrict itself to HNWI and SI I decided I didn't really understand what was going on and decided not to sign. My existing investments continued as normal, but not only could I not add new money I couldn't make any new investment. This would be very bad news for those platforms that rely on rolling over.
When Lending Club and others first listed in the US the outrageous valuation caused a rush to enter. Also fees could be as high as 10% of funds under management, or 50% of gross income and no-one seemed to mind. But the recent consultation also mentioned the latter point, and this is likely to be much discussed in the administration of Lendy. If the FCA introduces rules (they should) to highlight fees this too might give some a push they need.
When you further consider (as others have pointed out) that the platforms seem to be more concerned about treating the borrower fairly with less regard to the lender then perhaps it is time for some changes.
If some of the above shifts happen what will the sector look like? (And remember we have had pretty benign conditions for most of the last 10 years.)
It is easy to dismiss the collapse of both Collateral and Lendy as the latter - both made basic mistakes and failed. But I suspect that we are seeing the start of something bigger.
If nothing else the publicity of the above two (thread) might cause some of those using P2P as a savings account to think again. If they log into their site and find that, whilst not listed in default in the jolly monthly email, perhaps 10% or 20% of their investment is locked in, not able to be withdrawn. If the use FC the waiting list to withdraw now exceeds 50 days and this is one of the largest platforms; what will they think then?
Experts have been taking some stick in the past few years, but several have now abandoned P2P. In 2016 VSL stopped new investments in P2P, 2017 P2PGI joined them, and now incredibly FC's own IT is holding a vote on doing the same. Not quite the same but BondMason's recent decision also suggests that the risk/reward of P2P might not be there, at least in the small scale of most platforms.
I would be surprised if the FCA didn't restrict P2P to High Net Worth Investors (HNWI) or Sophisticated Investors (SI). They were consulting on doing this, and then Collateral and Lendy have collapsed with bad publicity. It is hard to judge how a small number of active members of this forum would be reflective of the wider investor base, but some seem to have made a number of complaints. Perhaps the complaints are justified and retail investors need to be shielded from shady or incompetent managers; perhaps the complaints are not justified and demonstrates that retail investors don't really understand the risks that they are taking. Either way the FCA might (should in my view) decide that restricting P2P to HNWI or SI is the only route.
When Lendinvest decided to withdraw its P2P application and restrict itself to HNWI and SI I decided I didn't really understand what was going on and decided not to sign. My existing investments continued as normal, but not only could I not add new money I couldn't make any new investment. This would be very bad news for those platforms that rely on rolling over.
When Lending Club and others first listed in the US the outrageous valuation caused a rush to enter. Also fees could be as high as 10% of funds under management, or 50% of gross income and no-one seemed to mind. But the recent consultation also mentioned the latter point, and this is likely to be much discussed in the administration of Lendy. If the FCA introduces rules (they should) to highlight fees this too might give some a push they need.
When you further consider (as others have pointed out) that the platforms seem to be more concerned about treating the borrower fairly with less regard to the lender then perhaps it is time for some changes.
If some of the above shifts happen what will the sector look like? (And remember we have had pretty benign conditions for most of the last 10 years.)