r00lish67
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Post by r00lish67 on Sept 27, 2019 17:04:26 GMT
A few questions for Assetz on their email just sent out to investors (w.r.t Turbine loans / Provision funds).
You say:
"We are, however, pleased to confirm that the total provision fund balances will remain at least at the level of funding published currently on our web site as at the end of March 2019, other than some of that balance being used for provision fund payments to lenders for any normal loan loss coverage"
If I've understood correctly, what you are saying is that despite the QAA's now being circa 25% larger than in March 2019, that they will now be less protected in £ terms than they were before.
This means that in effect, the % coverage of the provision funds for the various QAA flavours is now being chopped significantly.
So, firstly have I understood this correctly?
Secondly, why are you pleased to have reduced your coverage ratio? It sounds good for Turbine investors, but QAA investors seem to be worse off.
Third, can you advise how much further of the balance is also being taken away for "normal loan loss coverage"?
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nick
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Post by nick on Sept 27, 2019 17:48:16 GMT
My understanding was that the provision fund was to protect against losses on loan in certain pooled products. I fail to see why the provision fund needs to be tapped to compensate lenders in individual loans outside these products. I don't know the background to the turbine loans, but I assume that Assetz are returning funds in the turbine loan because of a screw-up that they are at least partially culpable for, in which case it should be on their dime on investors exposed to the provision fund.
Maybe I have the wrong end of the stick, but this re-appropriation of provision funds stinks and is the start of a slippery slope. Why is the publicly available provision fund info 6 months+ old. How are investors expected to make an informed investment decisions on obsolete info. Transparency would be greatly improved if provision fund data and coverage ratios are updated on a more regular basis. It is this lack of transparency can only fuel the FCA's concerns flagged in last year's review that investors might be lulled into a false sense of security by the availability of contingency funds.
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SteveT
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Post by SteveT on Sept 27, 2019 18:33:31 GMT
IIRC, we were previously assured that ALL of the difference between the full MLA lender rate and the rate paid to Access account lenders would be routed into the Access account PFs. Today's announcement logically implies that assurance is no longer true.
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Post by brightspark on Sept 27, 2019 19:17:59 GMT
This is robbing Peter to pay Paul. As I happen to be Peter I am not a happy bunny.
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alender
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Post by alender on Sept 27, 2019 20:34:13 GMT
I am struggling to understand how AC thinks it is a good idea to use the PFs to bail out loans which are not covered by the PFs.
As I did not have any of these loans I have not been following this in any detail but from what I can understand AC messed this up. IMO this is an abuse of the PFs and sets a very bad president for the future and makes me feel very uncomfortable about investments I hold in accounts covered by the PFs.
The PFs should be ring fenced and only used to protect accounts for which it is allocated and defiantly not for AC to dip into when they had a problem elsewhere.
It is like the captain of a ship in a storm sending its life boats on a one way trip to help another boat knowing they will not return and may well be needed for the passengers of his own ship without consulting his own passengers before sending them.
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Post by dan1 on Sept 27, 2019 21:03:36 GMT
Friday early evening certainly is the time for P2P platforms to bury bad news. I'm suspicious this announcement is in advance of the new rules imposed by FCA (see here) due to come into effect on 9 Dec 2019. I'm not sufficiently versed to make a judgement. |
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zlb
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Post by zlb on Sept 27, 2019 22:48:21 GMT
Friday early evening certainly is the time for P2P platforms to bury bad news. I'm suspicious this announcement is in advance of the new rules imposed by FCA (see here) due to come into effect on 9 Dec 2019. I'm not sufficiently versed to make a judgement. someone posted a pay wall article to The Times in the fb LAG group which apparently was telling platforms to get act together on amongst other things, transparency. So the FCA want to see the transparency now, as I interpret it. Seems this is not transparent though; seems that it could be in line with some suggestions in this thread. One could suspect that the approval of the FCA could have been 'help!, we're in trouble', not 'hi FCA, we've been thinking about how we can solve this issue, what do you think about our using the of for this...?'( are the fca aware that the pf referred to isn't for those loans?).
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registerme
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Post by registerme on Sept 27, 2019 23:22:47 GMT
I think people should go back and read the recent email(s) from AC more closely. I'm not giving them a free pass on this, but some of what has been surmised to date in this thread is clearly at odds with what AC have stated.
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Post by Ace on Sept 28, 2019 0:19:00 GMT
I'm not in these loans, but I would like to have a better understanding of what has been proposed.
My reading of the email was that AC are going to borrow what they consider to be "excess" funds in the PF to repay lenders in these troublesome loans. They are essentially allowing the PF to buyout lenders in these loans to allow them an earlier exit than would otherwise be achieved. The PF will then own the loans and will be entitled to future recoveries. I'm unclear on what would happen if/when there is a shortfall from the exhausted recoveries, but is this not the whole purpose of the PF? From other posts on here I'm assuming most of this is wrong.
I'd like to know:
What is the total outstanding capital and interest on these loans?
What is the expected shortfall after all recoveries?
What is the size of the "excess" funds in the PF?
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rrrupert
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Post by rrrupert on Sept 28, 2019 2:09:43 GMT
I'm not in these loans, but I would like to have a better understanding of what has been proposed. My reading of the email was that AC are going to borrow what they consider to be "excess" funds in the PF to repay lenders in these troublesome loans. They are essentially allowing the PF to buyout lenders in these loans to allow them an earlier exit than would otherwise be achieved. The PF will then own the loans and will be entitled to future recoveries. I'm unclear on what would happen if/when there is a shortfall from the exhausted recoveries, but is this not the whole purpose of the PF? From other posts on here I'm assuming most of this is wrong. I'd like to know: What is the total outstanding capital and interest on these loans? What is the expected shortfall after all recoveries? What is the size of the "excess" funds in the PF? Around 4.85m capital and maybe 200k interest Shortfall anything from zero to 70% depending on your optimism / pessimism levels and certain legal outcomes No clue about the size of the excess funds in PF Edit: I believe there are individual PF funds for each of the QAA type accounts and none for the MLA. So this moves money from some groups that seemed unconnected to the loans to those that are connected.
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Post by brightspark on Sept 28, 2019 8:58:00 GMT
I would be a little more sanguine about this use of the provision fund if it did not impact on AC's ability to deal properly with other large problem loans in the offing. I and I am sure others have in mind the £7M D******d M****n loan where can-kicking has been practised for 2 years plus.
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Post by Harland Kearney on Sept 28, 2019 11:06:20 GMT
I was entered into the Turbine loans though the Green Product back in the day. It has been years and year, AC really messed up oversight on these loans and are wanting to shut this case closed.
Some people invested equally among accounts between GBBA 1 and the energy account. I read one poster on this forum got a 5k allocation into a turbine loan that, that was spread out between multiple turbine. (by the same borrower)
I have only £12 left in these loans.
AC today, wouldn't accept this loan unlike AC 2016. In my oppuion, unlike alot of platforms they are paying this down and NOT kicking the can down the road for longer and longer. Thats good.
Additionally, this more of a reason as to why P2P should not be a driving part of a portflio or signficant chunks (for me it is 10% capped). This industry has new things up it sleeves happening every quater, including FCA looming over.
Good luck everyone, but take platform risk seriously please.
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Post by brightspark on Sept 28, 2019 13:19:28 GMT
I would be a little more sanguine about this use of the provision fund if it did not impact on AC's ability to deal properly with other large problem loans in the offing. I and I am sure others have in mind the £7M D******d M****n loan where can-kicking has been practised for 2 years plus. . I think AC are only structuring this payoff because they maybe broke procedure on these loans and ultimately are culpable for sorting it out. Versus DM, where it's just one of those long-running debacles where nothing actually seems to happen and everyone is tired of endless kicking of cans.
I see this as part of de-toxifying AC. After all, if you were an investor and came in and looked at what was overdue and why... you might have questions. Perhaps DM is next after this one... (I doubt it though, it seems a more "normal" well-overdue type of loan).
An underlying issue of DM is that some small investors are via the blackbox GBBA1 algorithm over-exposed. When investors invested via GBBA1 the expectation was that investments would be fully diversified. Instead some investors found they were over-invested in the DM loan which soon started to struggle rendering the loans illiquid. Subsequently GBBA1 was replaced by GBBA2. Like the wind turbine loans the problem for investors is partially created by the borrower but for some of those unlucky to be over-invested in the DM loan via GBBA1, also by the platform.
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sl75
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Post by sl75 on Sept 28, 2019 13:40:52 GMT
It seems to me that AC have confused the issue somewhat by linking together two separate issues.
1. Some of the PFs have a large surplus, which by the T&Cs AC is entitled to take off as their profit (only accessible if they manage the portfolio in a way that allows for a large surplus). 2. AC have confidentially agreed some terms I'm not at liberty to discuss that requires them to make some payments to certain groups of investors to be paid for out of their profits.
Whilst the cash for part 2 is indeed to be raised by means of extracting profits from some of the PFs, AC would be entitled to take it in any case, regardless of whether they'd promised the money to anyone else.
It's possible that, in the absence of this additional demand for funds they may have chosen not to take profits yet, but to continue to allow a larger surplus to accumulate, or to reduce the payments into the PF by decreasing the spread between lender and borrower rates... but that's pure speculation.
The only potential problem I see is that if a surge of bad debt erodes the surplus, they'll no longer be able to keep to the commitments made, and increase the risk that the PF may prove to be inadequate at some future date for its primary intended purpose.
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r00lish67
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Post by r00lish67 on Sept 28, 2019 14:00:31 GMT
The only potential problem I see is that if a surge of bad debt erodes the surplus, they'll no longer be able to keep to the commitments made, and increase the risk that the PF may prove to be inadequate at some future date for its primary intended purpose. Seems especially pertinent to the 90D QAA. As of 31st March 2019 there was £229k in the 90d provision fund, protecting approx £27.5m of loans at the time, or about 0.83% coverage. As of now, there is (roughly) £50m in the 90d account once you deduct the amount held in cash, so if there is still just £229k in the kitty, then we would be down to 0.45% coverage - which really is bugger all. I would hope that the 90d PF would regardless to the announcement have more money allocated to it given that it is a relatively new account. We'll have to see. Certainly won't be keeping money there if they don't!
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