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Post by gravitykillz on Nov 4, 2019 6:16:31 GMT
I got bad feelings about the future of p2p so I sold all my holdings a month ago. Apart from my 'investments' in lendinvest and crowdproperty. Currently got 7k between them. Hopefully they are more stable than the latter. Dont like funding circle I think that may possibly fail in the coming year as the share price has collapsed and investors run as there is a 4 month wait on withdrawals!
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Post by gravitykillz on Nov 4, 2019 6:18:39 GMT
Looking to 'invest' some money in a tudor or rolex watch. Will possibly buy one on my holiday in a few weeks when I go through duty free at Heathrow.
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tjtl
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Post by tjtl on Nov 4, 2019 14:00:17 GMT
A good thread, thanks to all contributors, and provides food for thought. I have voted in the 100% plus camp, maybe optimistic, but based on the current spread of portfolio
• Ratesetter (58% of portfolio)- I see no reason to doubt this paying back in full with continuing interest paying in full – however am reducing exposure with speed
• Relendex (9%)- there are some issues emerging in the portfolio, but so far no losses- and I think the interest earned on the good secured investments will offset losses (I am invested in 21 different loans) – am reducing exposure
• AssetzCapital- (9%)- expect no capital losses, and continuing interest- am increasing exposure
• Wellesley- (12%) – the probable dog. I have already taken some hit, however a number of the original bonds are about to expire and I hope to get full redemption (and to be fair all expired bonds so far have redeemed in full). So problems with the P2P loans but not so far the mine bonds. Will know shortly if optimism misplaced! Will exit as redemptions happen
• Funding Circle- (11%)- have a sale order on- 6th June- so should cash in any day now (only half the original holding) – am forecasting a 10% net loss on the FC portfolio – after sale will let balance reduce through non-reinvestment.
• Zopa (1%) will close.
My P2P investments are far too big a piece of my non pension wealth – just in to low seven figures. But as long as RS keeps solvent I think I will just about get out ahead- that being said it won’t have been worth the stress! Good returns in 2016, 17 and early 18- since then just poor, and will be “reinvesting” my sale or redemption proceeds with Mr Marcus.
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Post by bracknellboy on Nov 4, 2019 15:08:37 GMT
...... My P2P investments are far too big a piece of my non pension wealth – just in to low seven figures. But as long as RS keeps solvent I think I will just about get out ahead- that being said it won’t have been worth the stress! Good returns in 2016, 17 and early 18- since then just poor, and will be “reinvesting” my sale or redemption proceeds with Mr Marcus. Forgive me for asking, but is that including the pence ? if its not, perhaps putting it all into Marcus is something you should re-consider.
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tjtl
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Post by tjtl on Nov 4, 2019 15:26:29 GMT
It doesn't include the pence, but thanks for asking! (I do have the benefit of being of retirement age, with a life time of saving, spread in property, pension, and P2P - maybe I like the letter P)- I can take some pain, but as said am reducing almost ll my holdings across the board. Wellesley and FC are the two that worry me. What I think we are seeing is economic Darwinism at work- out of the shake up we will have fewer, better capitalised, P2P (or Institutional2P) platforms. The skill now I think is to work out which platforms will survive - and those that may not get the hell out of (hence the reductions underway)- Thankfuly all the platforms I am in - other than FC, have so far met their obligations on redemptions- fingers crossed that I get out reasonably unscathed.
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Post by Badly Drawn Stickman on Nov 4, 2019 15:44:22 GMT
It doesn't include the pence, but thanks for asking! (I do have the benefit of being of retirement age, with a life time of saving, spread in property, pension, and P2P - maybe I like the letter P)- I can take some pain, but as said am reducing almost ll my holdings across the board. Wellesley and FC are the two that worry me. What I think we are seeing is economic Darwinism at work- out of the shake up we will have fewer, better capitalised, P2P (or Institutional2P) platforms. The skill now I think is to work out which platforms will survive - and those that may not get the hell out of (hence the reductions underway)- Thankfuly all the platforms I am in - other than FC, have so far met their obligations on redemptions- fingers crossed that I get out reasonably unscathed. At a guess bracknellboy was suggesting the seven figure sum would exceed the level of protection on a Marcus account. Spreading it a bit thinner is tricky, but probably wise.
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bababill
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Post by bababill on Nov 5, 2019 0:38:50 GMT
mrclondonI tend to think that we should not lump Collateral in with our P2P investments, it was a scam pure and simple, it was not P2P. Let us keep in mind the FCA register was illegally tampered with. For example, if we invested and received shares in a Pistacho farm on the Niger Delta and it went bust would we say our share and stock portfolio went down? No we wouldn't. Ahh but that is different one might say because it was unregulated blah blah blah or it was a boiler room scam. If we got tempted from a "posh sounding" Englishman offering us P2P in an unsolicited phone call and we eventually got conned whilst he was playing the "long game" does that go into our P2P portfolio? Again probably not. This is just my genuine humble opinion. I note in your initial post you did not mention Collateral, perhaps that was intentional. As a clear influencer in this P2P world and if you share the same opinion it might be worthwhile to see how this poll would look without the Collateral unregulated investments. I look forward to your thoughts.
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jcm9000
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Post by jcm9000 on Nov 5, 2019 10:33:11 GMT
I am backtracking as fast as I can from P2P - which is tricky! Excluding Col, I currently have got everything back except 185 quid; with £6.6k tied up in various defaults across the usual platforms. Anything I get back now is a bonus, and I doubt I will get much so for a % looking fwd - I would reckon 10%. If I looked at everything since I started, different story.
Col unfortunately is the big kicker where I may lose 15k. The most I had in P2P was 60k, so not the end of the world (total 15% down if I lose on that from my max investment amount), but I sure would like something back from Col. That would cover a new car, whereas all I can see is the BDO senior staff racing off down to their Merc dealerships.
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rogedavi
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Post by rogedavi on Nov 5, 2019 11:30:27 GMT
in aggregate I expect >=100% back over 5 years, that is interest - bad debts >= 0 across all platforms. having access to that capital over that period I do not expect. that is to say liquidity to range between 30-100%.
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Post by mrclondon on Nov 5, 2019 12:54:30 GMT
bababill - my choice of platforms to mention in my OP was solely based on those who had delivered me grim news in the previous ten days. The last BDO/COL update was in May, the next not due until next May. Your suggestion of equating COL with a boiler room scam has given me pause for thought, but on reflection I feel there are dangers in focussing solely on this aspect. FCA interim permission even when gained legitimately didn't actually tell us anything particularly meaningful, other than they had traded prior to 2014. Many of us who have followed p2p since its inception in 2006 didn't place much weight on such permissions per se. The fact remains though that COL should never have started operations until it had acquired full permission given it wasn't eligible for interim permission. Whilst attempting to learn lessons from COL to assist in identifying other "scam" platforms is of benefit, I think it is vital to not omit COL from a wider analysis of failures in p2p. The asset classes used as security for loans on COL are essentially the same as on some other p2p platforms, both failed and operational. Indeed loans on COL have on some occasions also had a prior or subsequent life on L/FS/MT etc. Each administration is unique, and will have unique costs associated with it, but at this relatively early stage it feels that extensive management effort by the administrators of the failed loanbooks is required. P2P borrowers have few options available to refinance, and many will not be positively engaged in the process. More importantly such extensive management would also be required of the loanbooks of a number of still active platforms should they fail. At the level of winding up the loanbook I believe the administrators of COL/L/FS will face similar issues in realising the loans, and I believe the estimate by Lendy's administrators of a range of 7-100% recoveries to be equally applicable to COL & FS, and more importantly to the loanbooks of a number of still active platforms. So, in conclusion I believe it is appropriate to attempt to learn lessons from the manner in which the COL loanbook is realised (as well as those of L and FS) and the resulting outcomes to better inform on the selection of platforms, and loans on platforms in the future. There have been a number of exceptionally insightful posts on the forum recently, providing much food for thought. To highlight just a few Investors are not secured creditors of Funding Secure, but they had loans which were secured against third party assets. This does not make investors secured creditors of FS, even if FS was negligent in securing these loans. Legally I really don't think there is even an official relationship between the administrators and investors. The administrators sole aim is to manage the affairs of the company to efficiently achieve the best outcome for creditors. It is the FCA who signed off on FS' plan if it went out of business. I suggest we see what that says. The administration of a p2p company is pretty new territory. It's not like a bank where depositors are definite creditors and where their first £85k is protected by a scheme. Here we are into the murky world of trusts, ring-fenced accounts and FCA approved plans in black boxes. Maybe things are not as bleak as they appear, all in my opinion I would urge is people stop thinking the Administrators will be our savour and hold the FCA to account. It was noted by someone else that the Administrators are not appointed to work in the interests of us Lenders but rather they work for creditors [...] My next question is, who IS working on our behalf as I believe I was promised under FCA regulation that in the case of platform failure a robust plan would be in place to ensure Lenders don’t get shafted. I don’t think we have any support at all, we’re 3rd or 4th class citizens and completely unrepresented. [...] the FCA does not exist to ensure a retail investor's investments make a profit, nor is the FCA there to ensure that financial service business doesn't fail or that the business plan is sound. It could be a rubbish investment; it could be a rubbish business model. P2P as a concept may be fundamentally flawed. Not their problem. The only question for the FCA is does it meet the regulations. I n the case of P2P, the government's requirement for 'light touch' regulation ensured the regulations were far less stringent that for any other part of the financial services sector. Capital requirements for P2P platforms were minimal. Operational controls were light. Directors and employees prior experience could be limited or non-existent. As "FinTechs", the business model focussed on maximizing origination volumes over loan quality. This helped them secure equity capital and gave them upfront fees but also ensured downstream issues with large NPL portfolios. Regulation taken from the bilateral lending market ensured the "treating your customer fairly" meant treating the borrower too easily and not giving a damn about the lender. Lenders are just capital providers; they were never the clients. Finally, one I can't find the post, but paraphrasing it said At the moment I think the big story is the apparent inadequacy of the wind down plans to protect lenders (whilst recognising the administrators will need to be paid for their effort) if the platform goes into administration. Maybe its impossible to square this circle ... maybe huge losses for lenders following platform failure is the only possible outcome.
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aju
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Post by aju on Nov 5, 2019 16:19:19 GMT
Thanks mrclondon for pulling these together makes for sobering reading, especially as I've been unsure about p2p since day 1 for us and we are still only playing with RS and Zopa. Not in a small way for us but none the less playing is probably be a good word to use. I am trying to not play with funds we cannot afford to lose and am also at least factoring into my checks that we have made a low 5 figure sum in interest since we started. even with prevailing defaults we are still in the very high 4 figure arena. Our overall XIRR for our accounts joined together as a simple investment product are still at 4.68% for RS and Zopa is 4.50% ( Our Invest side is propping up the ISA if individual figures are taken into account but they have had less time to run as well.) Sadly that overall 5 figure sum has been taking a bashing from Zopa over the last year when we sold loans - trying to stay clear of selling SG loans where we could be sure of it - and what has become clear over the last 6 months is that selling out of zopa at least does give one some interesting results in terms of increased relative default hits - even when forcing £10 loans as a maximum to try and statistically get things nearer the published expectations. We are still very much in profit - even with the alternating bad/worse months and I am reviewing things until the end of the fin year (April 5th) before I decide to turn off relend if it does not seem like it's recovering or worse sell loans out and place into the safer RS, compared to Zopa at present, and if needs be back to Marcus and the like.
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Post by propman on Nov 5, 2019 17:10:46 GMT
I am not a lender on FS/Col/Lendy so have only followed the story from afar. But I thought that in Col (I may have got the platform wrong or it might be more than one), the current assumption is that the loans are to the platform so "investors" are creditors. As such, the administrator / liquidator is acting for lenders, but their fees are also taken from any recoveries before payments to investors.
I would have thought, from a layman's knowledge of insolvency law, that if the loans were actually due to the investors with the platform a paid administrator, that the investors would only need to pay for the costs of recoveries. I would hope that even in most insolvent situations that the new administrator would have access to the loanbook in full and that the wind down arrangements should mean that the costs of administrating the loan portfolio should be covered by fees due from borrowers. As a result, of the majority of borrowers pay back, then I don't see why the wind down provisions shouldn't function. Of course this is only likely to be the case for lower risk platforms and not in the most dire of financial disasters. also, there is always the possibility of a platform going bust due to failing to raise finance to cover intended losses while growing to critical mass. Laying off the staff and meeting commitments may well make them insolvent even if the underlying loan portfolio is successful.
As for the original question, I think we need to assess performance since the start rather than the notional value as it stands today. So I think the comparison should be cash paid in as 100% with cash expected to be received back to closure. On that basis I expect to be well over 100%.
- PM
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p2pfan
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Post by p2pfan on Nov 17, 2019 12:31:28 GMT
I would have thought, from a layman's knowledge of insolvency law, that if the loans were actually due to the investors with the platform a paid administrator, that the investors would only need to pay for the costs of recoveries. I would hope that even in most insolvent situations that the new administrator would have access to the loanbook in full and that the wind down arrangements should mean that the costs of administrating the loan portfolio should be covered by fees due from borrowers. As a result, of the majority of borrowers pay back, then I don't see why the wind down provisions shouldn't function. Of course this is only likely to be the case for lower risk platforms and not in the most dire of financial disasters. also, there is always the possibility of a platform going bust due to failing to raise finance to cover intended losses while growing to critical mass. Laying off the staff and meeting commitments may well make them insolvent even if the underlying loan portfolio is successful. It's all dependent on the wind-down plan each platform has in place, and we have next to no insight into that. The wind-down plans could be a mess and difficult for any administrator to implement in terms of continuing to get loan repayments from borrowers - be no means an easy task. Likewise, in my considerable experience in such scenarios (admittedly outside of P2P), the administrators' £650 and £750 + VAT an hour fees, multiplied by thousands of hours, mean they end up pocketing much of the lenders' money themselves. (These administrators are so avaricious in lining their own pockets they will even bill for every page they photocopy and won't omit to add 6 pence to their billing for that.) The fact that none of this mission-critical information re: wind-down plan mechanics and billing etc. is disclosed to us means it's purely guesswork whether we will ever get our money back in the case of a platform closing down and, if we do, how many pennies in the pound we're likely to be paid.
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Nov 17, 2019 15:22:44 GMT
Why ignore previous interest paid and defaults? Because I'm trying to assess how sensible it is for me to continue to invest in new p2p loans, and rightly or wrongly I don't think considering the interest I've received over the last 13 years (and minimal write offs) should influence my decision on future investments based on my current perception of the risks. The purpose of the poll is primarily to see if I'm being unduly pessimistic, and early results suggest not (I've ticked the 75-94% band) A worked example will illustrate my thinking. Lets assume a £100,000 loan portfolio I have c. 50% of my loanbook in loans in default / over 90 days late / on platforms in admin. I expect no further interest will be paid on these, and I expect to recover 70% of the capital. Recovery £50k * 0.7 = £35kBased on loan terms, and mix of retained interest vs invoiced monthly I expect to receive c. 10% interest from my active loans Interest = £5kand I expect half of those loans will repay in full Capital Repaid = £25kwith 70% recovery on the rest, Recovery = £25k * 0.7 = £17.5kso total receipts £35k + £5k + £25k + £17.5k = £82.5k i.e. 82.5%So on the £50k which is not currently non-performing, and which you can withdraw if there's a SM with liquidity, you expect to lose £2.5K net after interest?
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Post by mrclondon on Nov 17, 2019 16:02:57 GMT
So on the £50k which is not currently non-performing, and which you can withdraw if there's a SM with liquidity, you expect to lose £2.5K net after interest? In simple modelling terms, yes. The proportion of loans that default is too high and number of loans that make a full recovery when defaulted is too small for 8-12% interest to cover the capital losses. So on a simple invest and hold basis a loss is inevitable. So ... why wouldn't I sell everything I can at this point and invest in some other asset class ? A very good question, which I can only answer by saying that I would hope to flip that notional £50k several times before it all ends up defaulted, i.e strip out retained/accrued interest and leave someone else the maturity risk (and hence come out with a profit). But, when confidence in a platform is eroded, SM liquidity suffers. A p2p platform with zero losses thus far is probably going to declare its first partial recovery next month (or early January more likely) with all lenders in the loan taking a haircut. It will be interesting to see how that platform's SM responds to that news when it breaks.
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