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Post by loanstar on Oct 27, 2014 21:02:17 GMT
Hello Fellow Investors With well over sixty P2P and P2B funding platforms now available see www.p2pmoney.co.uk/companies.htmI just wondered who will be the winners and which sites will no longer be around in say 3 to 5 years time. This is the length of the loans we are being invited to invest in. Do we think there will be mergers? Or will sites just fail and close with us left to clear up the mess the best we can? This form of lending/investing is very new. Some outfits have backers with deep pockets, but other work on a shoe string. The only history to compare with is the rise and fall of friendly societies. Back in the latter half of the last century what normally happened was that when a small society had problems one of the bigger societies would take it over. The name on the pass book changed, but investor and borrowers saw little difference. I look forward to reading your comments. |
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bugs4me
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Post by bugs4me on Oct 27, 2014 22:35:20 GMT
Hello Fellow Investors With well over sixty P2P and P2B funding platforms now available see www.p2pmoney.co.uk/companies.htmI just wondered who will be the winners and which sites will no longer be around in say 3 to 5 years time. This is the length of the loans we are being invited to invest in. Do we think there will be mergers? Or will sites just fail and close with us left to clear up the mess the best we can? This form of lending/investing is very new. Some outfits have backers with deep pockets, but other work on a shoe string. The only history to compare with is the rise and fall of friendly societies. Back in the latter half of the last century what normally happened was that when a small society had problems one of the bigger societies would take it over. The name on the pass book changed, but investor and borrowers saw little difference. I look forward to reading your comments. This is of course a crystal ball glazing exercise. What appears to be a common failure thread is where the platform fails to achieve reasonable growth in order to attract new borrowers/lenders. Many of the newer ones are IMO just a reflection of what is available from the few established platforms. So there is really nothing there to attract my hard earned cash. So they bump along the bottom of the barrel for a few months or a couple of years and then cease to trade effectively. It's not in anyone's interests for a platform to fail but if/when that should happen then hopefully there won't be too much of a mess, (if any), to clear up. What is a concern is I suspect the odd P2P/P2B has vastly underestimated the costs associated with FCA compliance. At this stage I'm sure the FCA are adopting a 'light touch' but as I was involved with the old FSA this will not continue forever. Plus of course if there should be a disorderly platform failure then the 'light touch' will soon become a thing of the past. New players need to bring something new to the party and that tends to be one of their prime failings with their marketing. Plus the odd one or is it many tend to launch without sufficient testing being done on the robustness of their platform. It's all about confidence in my book. No they don't deserve a 'try out' simply because they've put up a(nother) P2P web site. It's their job to inspire the confidence. Just my ramblings.
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sl75
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Post by sl75 on Oct 28, 2014 18:39:45 GMT
It'd also be fascinating to see if anything more comes from clones of Burnley Savings and Loans ("Bank on Dave"), which featured quite heavily on Channel 4 a couple of years ago, and also appears to be covered under the new P2P regulations.
Some kind of "franchise" of a model along those lines could be an interesting idea - especially if "your local P2P" can be included in an ISA.
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Post by oldnick on Oct 29, 2014 6:45:25 GMT
It'd also be fascinating to see if anything more comes from clones of Burnley Savings and Loans ("Bank on Dave"), which featured quite heavily on Channel 4 a couple of years ago, and also appears to be covered under the new P2P regulations. Some kind of "franchise" of a model along those lines could be an interesting idea - especially if "your local P2P" can be included in an ISA. But is it really p2p if the depositor doesn't personally choose each borrower's proposition? Even AC's up and coming bespoke investment accounts may be stretching the meaning if you are able to 'set and forget' certain investment strategies and leave a computer to get on with it. Not criticising the concept - it looks very promising - just will it be p2p?
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pikestaff
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Post by pikestaff on Oct 29, 2014 8:18:28 GMT
Original post redacted. I agree with sl75's point below. Having said that, I have not looked under the hood to see whether Burnley Savings and Loan is actually p2p. In my view SS is not p2p (because you are lending to the company), and should arguably be regulated as a bank. I am not too sure about Wellesley either.
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sl75
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Post by sl75 on Oct 29, 2014 9:42:29 GMT
But is it really p2p if the depositor doesn't personally choose each borrower's proposition? Yes. Almost all P2P providers have a mechanism to allow investment without personally choosing each borrower's proposition, and several have this as the ONLY mechanism. Indeed, Zopa as the very first P2P finance provider only briefly dabbled with "Listings" to allow lenders to individually choose borrowers, and it was far less successful than their original market-based approach where you cannot individually choose your borrowers. What makes it really P2P seems to me as the 1:1 matching of lenders' investments with borrowers loans. Whether that 1:1 matching is made directly visible to the lenders and borrowers themselves (rather than just regulators and auditors) seems to me only a secondary consideration.
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mikes1531
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Post by mikes1531 on Oct 29, 2014 11:02:04 GMT
I find the discussion of capital requirements in relation to P2P lending quite interesting. While the banks are required to have a certain level of capital reserves in order to be permitted to make loans -- and that may be a factor in the banks restricting the number/amount of loans they make -- are there any capital requirements for P2P platforms at all?
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bugs4me
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Post by bugs4me on Oct 29, 2014 11:16:39 GMT
I find the discussion of capital requirements in relation to P2P lending quite interesting. While the banks are required to have a certain level of capital reserves in order to be permitted to make loans -- and that may be a factor in the banks restricting the number/amount of loans they make -- are there any capital requirements for P2P platforms at all? I'm not aware of any capital reserve requirements for P2P companies as they are not utilising depositors funds but acting as a conduit for lenders/investors. Plus of course banks operate on a fractional reserve basis so in effect they loan out far more than they have in deposits. Think though this percentage has just been increased by the BoE.
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Post by davee39 on Oct 29, 2014 11:39:27 GMT
There is a minimum capital requirement which I believe is intended to cover costs if a platform winds down. I think it is currently a derisory £20k but due to rise to £50k over the next few years.
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Post by yorkshireman on Oct 29, 2014 11:48:29 GMT
It'd also be fascinating to see if anything more comes from clones of Burnley Savings and Loans ("Bank on Dave"), which featured quite heavily on Channel 4 a couple of years ago, and also appears to be covered under the new P2P regulations. Some kind of "franchise" of a model along those lines could be an interesting idea - especially if "your local P2P" can be included in an ISA. But is it really p2p if the depositor doesn't personally choose each borrower's proposition? Even AC's up and coming bespoke investment accounts may be stretching the meaning if you are able to 'set and forget' certain investment strategies and leave a computer to get on with it. Not criticising the concept - it looks very promising - just will it be p2p? As an investor with Burnley Savings & Loans I agree that it isn’t P2P per se but I like the concept as it’s another way of getting a reasonable return (5% for 2 years) albeit without FSCS cover. I was talking with Dave Fishwick during a visit to the branch earlier this year and it sounds like there could be some interesting developments in the future.
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Post by oldnick on Oct 29, 2014 12:39:56 GMT
To have read a post written by someone who has met Dave is very gratifying. He has been a hero of mine since the tv programme about him. And that's despite him being from Yorkshire! Before anybody thinks of reporting this post consider this - any disparaging remark aimed at Yorkshire folk is as water to a duck's back, so convinced are they of their own superiority. Anyone not born there will just agree with me.  |
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Post by yorkshireman on Oct 29, 2014 12:48:23 GMT
To have read a post written by someone who has met Dave is very gratifying. He has been a hero of mine since the tv programme about him. And that's despite him being from Yorkshire! Before anybody thinks of reporting this post consider this - any disparaging remark aimed at Yorkshire folk is as water to a duck's back, so convinced are they of their own superiority. Anyone not born there will just agree with me. That’s why Yorkshire is known as God’s Own County. 
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Post by parag on Oct 29, 2014 13:28:30 GMT
But is it really p2p if the depositor doesn't personally choose each borrower's proposition? Even AC's up and coming bespoke investment accounts may be stretching the meaning if you are able to 'set and forget' certain investment strategies and leave a computer to get on with it. Not criticising the concept - it looks very promising - just will it be p2p? As an investor with Burnley Savings & Loans I agree that it isn’t P2P per se but I like the concept as it’s another way of getting a reasonable return (5% for 2 years) albeit without FSCS cover. I was talking with Dave Fishwick during a visit to the branch earlier this year and it sounds like there could be some interesting developments in the future. Dave certainly has something in the pipeline. I think it's fantastic what he is planning and I'm sure it will be well received by lenders.
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Post by loanstar on Oct 29, 2014 21:10:23 GMT
I find the discussion of capital requirements in relation to P2P lending quite interesting. While the banks are required to have a certain level of capital reserves in order to be permitted to make loans -- and that may be a factor in the banks restricting the number/amount of loans they make -- are there any capital requirements for P2P platforms at all? I'm not aware of any capital reserve requirements for P2P companies as they are not utilising depositors funds but acting as a conduit for lenders/investors. Plus of course banks operate on a fractional reserve basis so in effect they loan out far more than they have in deposits. Think though this percentage has just been increased by the BoE. On the subject of capital reserve requirements the platforms only needs enough to keep the basic functions running as they wind down. At that point would any other player take over the site? The over heads of running a P2B platform are nothing compared to running a bank. It would not surprise me if some of the smaller outfits were no more than a couple of people with a few high spec machines based in a none too wonderful office. All we see is a smart web site. The second part is the capital behind the lending. No bank could work on the ratio that I represent. Only a small percentage of my capital is involved. If all of it disappear tomorrow I would be very sad, but apart for a few burnt fingers and lessons learned, no one else would be effected. Unlike a bank I only lend out money I have. I do not take deposits from others, then lend it. This is the same for the majority of investor I hope. Therefore we can take more risk if we wish. The FCA do not need to worry again because of the capital reserves we should have. The only problem would be if thousands jumped in with all the savings they had, or worse still borrowed to invest.
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Post by tybalt on Oct 29, 2014 21:23:07 GMT
The difference versus Banks is that we are doing the lending. There cannot be a run on FC or TC because there is only the Secondary Market on which to sell the loans.
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