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Post by newlender on Oct 7, 2019 7:37:12 GMT
There's a big article about P2P on pages 44 and 45. 'A further platform is teetering on the brink of insolvency' apparently. Any ideas which one?
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r00lish67
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Post by r00lish67 on Oct 7, 2019 7:44:22 GMT
There's a big article about P2P on pages 44 and 45. 'A further platform is teetering on the brink of insolvency' apparently. Any ideas which one? Link here:
Re: your question, perhaps the answer lies a couple of paragraphs down: "So why the downturn in confidence? There are some clues in the FCA’s recent letter, which talks about “rapid changes to business models” and problems in an alarming array of areas, including “disclosure of information to clients, charging structures . . . and record keeping”. "Where lending platforms are reluctant to recognise defaults, as many are, published bad debt rates can be misleading." Also note that the article also covers Assetz' recent announcement re: the PF/Turbines.
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benaj
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Post by benaj on Oct 7, 2019 8:53:59 GMT
There's a big article about P2P on pages 44 and 45. 'A further platform is teetering on the brink of insolvency' apparently. Any ideas which one? Link here:
Re: your question, perhaps the answer lies a couple of paragraphs down: "So why the downturn in confidence? There are some clues in the FCA’s recent letter, which talks about “ rapid changes to business models” and problems in an alarming array of areas, including “disclosure of information to clients, charging structures . . . and record keeping”. "Where lending platforms are reluctant to recognise defaults, as many are, published bad debt rates can be misleading." Also note that the article also covers Assetz' recent announcement re: the PF/Turbines. It reminds me one or two which have been rapid changes to their business models and charging structures. Having said, I do see there's been lots of changes in T&C across many p2p lending platforms, hopefully, these changes are meant to provide sustainability of p2p lending.
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aju
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Post by aju on Oct 7, 2019 9:33:31 GMT
I'm guessing that this letter is not freely available although the times somehow seems to have seen it - as far as I know though no one has printed it or made it freely available.
Is the letter available for all to see if not why is there such secrecy over what this so called damning letter says.
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sd2
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Post by sd2 on Oct 7, 2019 9:56:10 GMT
More importantly 65 peer to peers. Surely that can't last?
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ashtondav
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Post by ashtondav on Oct 7, 2019 13:35:04 GMT
There's a big article about P2P on pages 44 and 45. 'A further platform is teetering on the brink of insolvency' apparently. Any ideas which one? I would imagine Funding Secure must be top of the list. They have “6 month loans” which have not redeemed after 1 year and they are still not classed as defaults. Assetz have ‘fessed up to a turbine blunder. FS has 30 or 40 loans in my account alone which have gone t1ts up due to no DD, no security held, borrower fraud and cr@p valuations.
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aju
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Post by aju on Oct 7, 2019 15:35:39 GMT
The article also mentions lack of transparency with default levels
and I'm sure Zopa is squeaky clean but I have considerable defaults on that platform have now crystalised having been sold to a debt collection agency for x% on the dollar. No skin off Zopa's back as the lenders are the ones that take the hit in this - in fact it reduces in house work and they argue it frees up staff to increase collections rates on the more likely to pay loans!.
I'm not sure if these expunged loans - now marked up as "Settled" although I was never consulted in the settlement other than to be given x% on the dollar resulting in almost a 4 figure crystalised loss overall - are still on their books as defaults.
Now don't get me wrong I've still made some considerable profit to cover these losses but if things get much worse I'll have to seriously consider pulling out of Zopa before the defaults eat into more unreasonable levels of profit.
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zlb
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Post by zlb on Oct 7, 2019 17:49:10 GMT
I hope it's not AC. But this is relevant from the article relating to the recent AC use of one particular pf for an unrelated bad loan, and AC claiming that they will monitor pf as a result, which seems like a strange answer:
"When The Times asked for a clearer explanation of how the redress scheme will work, the numbers affected and how much was being returned, Assetz said: “As we have legal actions being taken against multiple parties, we are not at liberty to go into more detail at this stage.”"
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Post by mrclondon on Oct 7, 2019 19:47:56 GMT
I think its worth bearing in mind that a platform that a journalist thinks is "tettering on the brink" may be a platform that anyone who is actively involved with the sector will understand the nuances better, and can form a more realistic view as to the probability of near term failure.
Its also important to realise that apart from the 2 high profile failures (COL & L) almost all the other uk p2p failures have been managed closures, an approach that is both more desirable and likely than administration. Sixty five platforms is an unsustainable number and the vast majority will cease to operate over the next few years. The forthcoming restricted investor / sophisticated / HNWI changes are likely to kick start a wave of managed closures over the next year.
Of greater concern to me is the attitude of platforms towards the provision of adequate and transparent information to lenders both at the individual loan level and at the wider loanbook performance level. The recent FCA letter has reportedly been met with indifference by a number of platforms, an attitude which will surprise few of us on this forum. The FCA has threatened to get tough, if they do there could be a number of platforms who might well end up in the equivalence of the special measures applied to Lendy. I don't think the lack of transparency is merely a legacy hangover from the early days of p2p, my impression from even fairly recent interactions with a number of platforms is that they see any increase in transparency as detrimental to their business (i.e. detrimental to their ability to fill loans).
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corto
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Post by corto on Oct 7, 2019 20:27:51 GMT
I haven't seen the article but many of the phrases and suggested actions to be taken that one now finds in articles across the internet appear already in the FCA's report from June 2019 (ps19-14.pdf). This is a pretty generic report not referring to concrete cases (but listing 44 non-confidential responders / platforms). The new letter may well be just a reminder to the p2p providers to read the report and act accordingly. The mentioning of a platform that is close to failure is not a part of it. That story may be some private game of somebody elsewhere. It does not match the FCA style.
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iRobot
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Post by iRobot on Oct 7, 2019 20:48:46 GMT
I think its worth bearing in mind that a platform that a journalist thinks is "tettering on the brink" may be a platform that anyone who is actively involved with the sector will understand the nuances better, and can form a more realistic view as to the probability of near term failure.
Its also important to realise that apart from the 2 high profile failures (COL & L) almost all the other uk p2p failures have been managed closures, an approach that is both more desirable and likely than administration. Sixty five platforms is an unsustainable number and the vast majority will cease to operate over the next few years. The forthcoming restricted investor / sophisticated / HNWI changes are likely to kick start a wave of managed closures over the next year.
Of greater concern to me is the attitude of platforms towards the provision of adequate and transparent information to lenders both at the individual loan level and at the wider loanbook performance level. The recent FCA letter has reportedly been met with indifference by a number of platforms, an attitude which will surprise few of us on this forum. The FCA has threatened to get tough, if they do there could be a number of platforms who might well end up in the equivalence of the special measures applied to Lendy. I don't think the lack of transparency is merely a legacy hangover from the early days of p2p, my impression from even fairly recent interactions with a number of platforms is that they see any increase in transparency as detrimental to their business (i.e. detrimental to their ability to fill loans).
I'd like to know who the sixty-five are. Is there a list? Can see some simply allowing their loan books to run down. Maybe some mergers. But those that want to stay in this game will need to 'get real' in their relationships with customers and the FCA. Trouble is, that costs money which will reduce rates, which will reduce the attractiveness, which makes it harder for platforms to fill loans, etc etc. So they may opt to get out. And by 'out', I mean fall out of the FCA catchment for P2P, so perhaps get into a niche area with 'reassuringly expensive' entrance fees such as BridgeCrowd or HNW. (I think I'm correct in believing BC aren't strictly speaking a P2P company. Although, perhaps paradoxically, I find their levels of transparency far better than many actual P2P companies.) Two things I'd like to see: 1) the FCA abandons 'skin in the game' ban. To be competitive, platform will need to demonstrate their own interests are more greatly aligned with lenders and that they truly have faith in their loan origination capabilities. 2) the FCA bans secondary markets, or makes it impossible for lenders selling on the SM to gain from that sale - ie no interest earned (instead interest goes back to the platform to fund 'skin in the game' or whatever). This would cause lenders to be a lot more circumspect on how much they invest in any one loan from the outset, which would make loans harder to fill and should encourage platform to originate better quality loans, present them in a more transparent way and manage them in a more proactive manner - especially when combined with 1)
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IFISAcava
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Post by IFISAcava on Oct 7, 2019 20:56:23 GMT
Two things I'd like to see: 1) the FCA abandons 'skin in the game' ban. To be competitive, platform will need to demonstrate their own interests are more greatly aligned with lenders and that they truly have faith in their loan origination capabilities. 2) the FCA bans secondary markets, or makes it impossible for lenders selling on the SM to gain from that sale - ie no interest earned (instead interest goes back to the platform to fund 'skin in the game' or whatever). This would cause lenders to be a lot more circumspect on how much they invest in any one loan from the outset, which would make loans harder to fill and should encourage platform to originate better quality loans, present them in a more transparent way and manage them in a more proactive manner - especially when combined with 1) I am completely and utterly against a ban on secondary markets. Why deliberately reduce liquidity further in an already illiquid investment?
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cb25
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Post by cb25 on Oct 7, 2019 21:55:13 GMT
I think its worth bearing in mind that a platform that a journalist thinks is "tettering on the brink" may be a platform that anyone who is actively involved with the sector will understand the nuances better, and can form a more realistic view as to the probability of near term failure.
Its also important to realise that apart from the 2 high profile failures (COL & L) almost all the other uk p2p failures have been managed closures, an approach that is both more desirable and likely than administration. Sixty five platforms is an unsustainable number and the vast majority will cease to operate over the next few years. The forthcoming restricted investor / sophisticated / HNWI changes are likely to kick start a wave of managed closures over the next year.
Of greater concern to me is the attitude of platforms towards the provision of adequate and transparent information to lenders both at the individual loan level and at the wider loanbook performance level. The recent FCA letter has reportedly been met with indifference by a number of platforms, an attitude which will surprise few of us on this forum. The FCA has threatened to get tough, if they do there could be a number of platforms who might well end up in the equivalence of the special measures applied to Lendy. I don't think the lack of transparency is merely a legacy hangover from the early days of p2p, my impression from even fairly recent interactions with a number of platforms is that they see any increase in transparency as detrimental to their business (i.e. detrimental to their ability to fill loans).
I'd like to know who the sixty-five are. Is there a list? Can see some simply allowing their loan books to run down. Maybe some mergers. But those that want to stay in this game will need to 'get real' in their relationships with customers and the FCA. Trouble is, that costs money which will reduce rates, which will reduce the attractiveness, which makes it harder for platforms to fill loans, etc etc. So they may opt to get out. And by 'out', I mean fall out of the FCA catchment for P2P, so perhaps get into a niche area with 'reassuringly expensive' entrance fees such as BridgeCrowd or HNW. (I think I'm correct in believing BC aren't strictly speaking a P2P company. Although, perhaps paradoxically, I find their levels of transparency far better than many actual P2P companies.) Two things I'd like to see: 1) the FCA abandons 'skin in the game' ban. To be competitive, platform will need to demonstrate their own interests are more greatly aligned with lenders and that they truly have faith in their loan origination capabilities. 2) the FCA bans secondary markets, or makes it impossible for lenders selling on the SM to gain from that sale - ie no interest earned (instead interest goes back to the platform to fund 'skin in the game' or whatever). This would cause lenders to be a lot more circumspect on how much they invest in any one loan from the outset, which would make loans harder to fill and should encourage platform to originate better quality loans, present them in a more transparent way and manage them in a more proactive manner - especially when combined with 1) I disagree with both of your points 1) if platforms lend, borrowers will see them as aligned with lenders, not as honest middlemen. Platforms might also be unwilling to terminate a failing loan and crystallise the loss even though lenders wish to. 2) SMs are necessary to allow lenders to exit loans early.
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Post by mrclondon on Oct 7, 2019 23:37:40 GMT
2) the FCA bans secondary markets, or makes it impossible for lenders selling on the SM to gain from that sale - ie no interest earned (instead interest goes back to the platform to fund 'skin in the game' or whatever). This would cause lenders to be a lot more circumspect on how much they invest in any one loan from the outset, which would make loans harder to fill and should encourage platform to originate better quality loans, present them in a more transparent way and manage them in a more proactive manner - especially when combined with 1)
I'm struggling to articulate a response as I simultaneously agree and disagree (I've deleted 2 previous drafts already ! )
Whilst I agree that lenders collectively need "to be a lot more circumspect on how much they invest in any one loan from the outset", I think much of the responsibility for irresponsible filling of loans lies with the so called big hitters and underwriters who have on numerous occaisons filled loans that should never have been filled.
The attitude has too widely been either "the platforms must know what they are doing, it will all come right in the end." or "I'll off load on the SM so hopefully no maturity risk".
Whilst my extensive due dilligence, risk analysis and ongoing loan monitoring is designed to weed out those loans with a high risk of default and/or a high risk of loss on default, my main modus operandi is to strip out the relatively low risk retained (or accrued) interest and pass the capital maturity risk onto someone else. Inevitably I am still the owner of a bewildering array of distressed loans, but by design a subset of the loans offered that should consist of lthose which will suffer the lowest capital loss.
SM's provide a valuable exit route when people genuinely need to liquidate their investment (subject to demand), and are an essential part of a platforms offering. However, the ability to sell after stripping out months or years of lowish risk retained interest does distort the risk assesement of a loan on the PM.
Unfortunately constructing an interest model that reduces that distortion whilst allowing SM access to capital if required is not easy, as even if all interest rolled up and was only paid (prorata to length of time held) after all capital had been returned, it still transfers the maturity risk onto the SM buyer. Maybe, as you suggested, the only solution is a claw back of interest paid when selling on the SM so you only get back what you invested. A draconian solution that would be very unpopular.
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sqh
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Post by sqh on Oct 8, 2019 1:46:21 GMT
There's a big article about P2P on pages 44 and 45. 'A further platform is teetering on the brink of insolvency' apparently. Any ideas which one? I would imagine Funding Secure must be top of the list. They have “6 month loans” which have not redeemed after 1 year and they are still not classed as defaults. Assetz have ‘fessed up to a turbine blunder. FS has 30 or 40 loans in my account alone which have gone t1ts up due to no DD, no security held, borrower fraud and cr@p valuations. , Unfounded speculation could get you into very serious trouble. Although FS has many problem loans it is not insolvent, and the new directors have deep pockets. Moreover the latest loans on the platform are performing well. The new directors are working hard to recover the problem loans and we should see significant recoveries in the next few months, as a result of their actions against some dodgy borrowers and valuers.
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