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Post by Matthew on Jan 30, 2020 12:32:11 GMT
Matthew thanks for taking the time to reply. I know this forum is a hostile environment right now, but your presence and responses are appreciated. Are you able to provide more details on how you expect the adjustment to reduce in H2 2020? I started investing in November 2018 and to the 1st January 2020 I'd made a healthy XIRR of 5.9% (pulled down slightly by the initial cash drag). If I withdraw today, the return is reduced to 0.36% mainly due to the interest shortfall discount, and this becomes negative if I take into account the small sum I can't withdraw (presumably for loans in default). The dilemma I have is that I can cut my losses today and walk away from LW for almost break even, so my invested sum is protected, or I trust LW for the long term - my return should come up closer to the 5.4% over several years, but my invested sum is at risk. I guess I'm really after information to give me confidence that LW are still a good place to look after my money (risk vs reward). Perhaps a forum is not the right place for this discussion but I suspect many people are in the same position as me. I wouldn't trust Lending Works one iota, all trust has gone now, what's stopping them saying we are cutting the rate to match the banks of 0.25% and back date it to when you first invested. Oh sorry, no they wouldn't say that, they would just cut the rate to 0.25% and wait until existing investors figure out what has gone on. They are no different to the Lendy, Funding Secure, collateral, etc. Matthew What percentage of staff at lending works cashed in, during each of the last 6 months of 2019? Hi keystoneLending Works staff do not hold investment accounts or take out loans through the platform. Thanks
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Post by Ace on Jan 30, 2020 13:42:21 GMT
I wouldn't trust Lending Works one iota, all trust has gone now, what's stopping them saying we are cutting the rate to match the banks of 0.25% and back date it to when you first invested. Oh sorry, no they wouldn't say that, they would just cut the rate to 0.25% and wait until existing investors figure out what has gone on. They are no different to the Lendy, Funding Secure, collateral, etc. Matthew What percentage of staff at lending works cashed in, during each of the last 6 months of 2019? Hi keystone Lending Works staff do not hold investment accounts or take out loans through the platform. Thanks Allow me to translate: "They all cashed in".😁 Sorry Matthew, just couldn't resist it.
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Post by 673639neil on Jan 31, 2020 22:10:16 GMT
I feel that, I have been lied to by lending works, this upsets me greatly, I don't know why everyone is saying 5.4% as I decided very narrowly to leave my investment alone, as I was willing to accept 5.4% but during the month of January I have actually only received approximately 1.5%
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Post by 673639neil on Jan 31, 2020 22:19:43 GMT
Well done Lending Works on your recent changes, you've achieved the impossible and made the paltry rates on offer with traditional high street savings accounts look attractive. Banks advertise the interest rate you actually get and your capital is protected up to 85k...Lending Works hide behind an amalgamation of past interest that is now unobtainable, put your capital at risk and charge a hefty premium if you want to sell out. Disgraceful. As a minimum the FCA need to investigate the false headline interest rates being advertised. Hero to zero in one change. Love this post and so true, why are the FCA not getting involved?
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benaj
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Post by benaj on Jan 31, 2020 23:39:47 GMT
www.lendingworks.co.uk/blog/peer-to-peer/credit-risk-performance-update-january-2020According to LW’s Head of Risk, the Shield’s Contingency Fund was running low, £££££. This info wasn’t available before 29th Jan 2020. A rough calculation of 1.1% interest rate adjustment would only increase Contingency Fund of a 92Mil loanbook by £84k a month. The extra Interest rate margin of 3% would generate an extra £ 230k a month, it would probably take 4 months before Contingency Fund back to £1 mil assuming annual expected loss does not exceed 3% in 2020.
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Post by jonrgrant on Feb 1, 2020 8:23:05 GMT
Like others I feel totally mislead by Lending Works failure to clearly communicate what the new 5.4% interest rate actually meant to invested percent returns moving forward. I supported and kept my funds invested when the declared rate change was announced, believing that the change was from 6.5% to 5.4%, however now to be earning less than in a protected bank account is a total disaster. Never have I seen such manipulation of an interest percent and a claim that because I received the agreed 6.5% previously now in order to make a loan lifetime rate of 5.4% I will only get 0.65 % to create a 5 year average. This is NOT how interest LENDING WORKS. It is as ridiculous as me saying the interest rate is now 5.4% per annum, but I expect this to be the average over 10 years, therefore for 6 years I received no interest I need my remaining monthly interest rate to be increased to give an average over 10 years of 5.4% - yes ridiculous, but that’s what LW have done in reverse!
Now we know what LW way of working is, all those who are not happy with the change from the contracted rate of 6.5% to the undeclared less than 2% (it’s not 5.4%), should be allowed to withdraw their money with out the shackling fees now being levied.
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ashtondav
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Post by ashtondav on Feb 1, 2020 9:46:01 GMT
I haven’t done the sums but it may even be worth paying the 5% or 6% and redeploying capital on a higher, more reliable platform.
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alanh
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Post by alanh on Feb 1, 2020 9:48:10 GMT
Given what has happened here, do LW seriously expect to be able to survive this? Existing investors have either left or are running down. New investors (if there are any) are being marketed interest rates that make no sense and aren't being achieved, something that will be immediately apparent when they check their interest received. The provision fund remains a mystery now that its only disclosed quarterly, but regardless of its level is anyone actually going to care after this shambles? I can't see where they go from here.
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keystone
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Post by keystone on Feb 1, 2020 10:18:04 GMT
I haven’t done the sums but it may even be worth paying the 5% or 6% and redeploying capital on a higher, more reliable platform. Or even a platform that doesn't lie to its investors.
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Post by propman on Feb 1, 2020 13:33:00 GMT
Like others I feel totally mislead by Lending Works failure to clearly communicate what the new 5.4% interest rate actually meant to invested percent returns moving forward. I supported and kept my funds invested when the declared rate change was announced, believing that the change was from 6.5% to 5.4%, however now to be earning less than in a protected bank account is a total disaster. Never have I seen such manipulation of an interest percent and a claim that because I received the agreed 6.5% previously now in order to make a loan lifetime rate of 5.4% I will only get 0.65 % to create a 5 year average. This is NOT how interest LENDING WORKS. It is as ridiculous as me saying the interest rate is now 5.4% per annum, but I expect this to be the average over 10 years, therefore for 6 years I received no interest I need my remaining monthly interest rate to be increased to give an average over 10 years of 5.4% - yes ridiculous, but that’s what LW have done in reverse! Now we know what LW way of working is, all those who are not happy with the change from the contracted rate of 6.5% to the undeclared less than 2% (it’s not 5.4%), should be allowed to withdraw their money with out the shackling fees now being levied. My understanding is that they are taking the contributions required to meet expected payouts in the immediate period (although some timescale would be helpful). As I suspected, defaults appear to have not been declared on all loans that deserved it. There is thus some catch up as these are defaulted using the interest withheld. I would expect the rates to get much higher for more recent loans once these immediate issues are dealt with. Similarly (subject to the inevitable assumption that they are correctly identifying the default risk now), the 2020 loans should be at 5.4% with no need for further deductions, so those brave enough to keep reinvesting will see interest rates recover. The older loans were mispriced and so will suffer deductions. Bear in mind that many of the loans from that time will have repaid (incl. acknowledged defaults) so the return on those will have been the original inflated returns, so this is not too unreasonable.
If these were corporate bonds, their value would have dipped more than the 6% or so being charged and the only way to recoup the difference would be to retain them and take the premium interest. Ie the hit would be to capital with interest (when paid) staying the same. I think it unfair to expect that the investments should yield a good rate going forward and repay all of their capital, where would the contribution to reinstate the PF have come from then? I suspected that they were going to try to pay these rates now, but would need to cut it shortly, so not much different. I suspect that those that retain their loans will see pay outs on more defaults to make up some of the cashflow shortfall (ie avoiding the interest premiumof selling out) and that some of the purchasers will get a windfall from the interest premium on loans that then payout as defaults / repayments ahead of time.
Basically we invested in a risky product that was always going into difficulty at some time. We are now paying the price. LW messed up by having a poorly thought through mechanism for resolving the issue. They put this right late at the cost of fee free withdrawal at the 11th hour. I understand that this is not an FSCS savings account, but it was not advertised as one and the losses are low compared to what happens to most investments at this rates in difficulty, but that is poor recompense for those in it.
- PM
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ashtondav
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Post by ashtondav on Feb 1, 2020 13:57:49 GMT
Very lucid and clear. Thanks. So new investors in 2020 can, indeed, be (confident) of hitting 5.4%?
Lets hope so because the older investors are not sticking around to test that particularly murky water...
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macq
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Post by macq on Feb 1, 2020 14:05:46 GMT
Very lucid and clear. Thanks. So new investors in 2020 can, indeed, be (confident) of hitting 5.4%?
Lets hope so because the older investors are not sticking around to test that particularly murky water...
But the our investors section in the January update suggests we are all happy     ..............................not 
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r00lish67
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Post by r00lish67 on Feb 1, 2020 14:20:05 GMT
There is thus some catch up as these are defaulted using the interest withheld. I would expect the rates to get much higher for more recent loans once these immediate issues are dealt with. Similarly (subject to the inevitable assumption that they are correctly identifying the default risk now), the 2020 loans should be at 5.4% with no need for further deductions, so those brave enough to keep reinvesting will see interest rates recover. I'd like to agree, but I still just don't understand how the more recent loan estimates are realistic. Consider this. Based on the November statistics for 2017 loans, borrowers borrowed at an average rate of 9.7%. The forecast bad debt rate from LW for these borrowers including recoveries was 7.3% (they initially expected less than half of this). Contrast that with the 2019 loans. Borrowers borrowed at an average rate of 14.0% and yet the forecast bad debt rate was just 5.0%. Does that sound realistic? Note also that there is now apparently no insurance component to fall back on. As I understand it, it is that forecast, and how well loans do relative to it, that will define lender returns going forward for that year. Perhaps the actual return net of defaults could possibly be higher than previous years, given the high gross borrower APR. But will lenders see any of that if the forecast is still set to 5.0% and it comes in at, say, 8.0%? I would have said one option is to at least closely monitor how it goes from here on in rather than cash in, but in my view the revised statistics are far less helpful in tracking performance. You can track default rates, but they don't include recoveries. Plus the expected lifetime default rate is no longer stated. Finally, they're now only delivered quarterly, which probably means you're not going to be able to react quickly enough anyway. It's possible that they've drastically changed the 2019 forecasts as part of all of these recent changes. But how would we know? I've no idea, unless maybe it's stated on the dashboard or somewhere. Sorry, probably repeating myself all over the place, but to me now it just looks like "well you'll have to trust us" rather than something relatively easy to quantify yourself. edit: should add, I'm only talking about 2019 as there's no data for 2020 as of yet. But, same applies - how can one assess performance in a timely way, as we could before?
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zlb
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Post by zlb on Feb 1, 2020 19:35:02 GMT
I'm still trying to get my head round some of this...
Are we saying that someone who signs up to LW now and invests an amount -will only get 2.3% in Feb despite it saying 5.4% ?
If so - surely that is a case of misselling ?
My guess, for the Growth product, new loans propably will perform very close to 5.4% in the first 6 months. New investors would probably pick up a bit of 2019 and 2018 loans, those would have perform below 5.4% and interest received in the first 6 months are subject to interest rate margin. 5.4% is the "target return" for the Growth product, not the Lender Rate per agreement. I'm struggling to understand what people are experiencing here. I can annualise my annual LW monthly from Jan as 4.1% 2.1% - is this the issue? Seems so. So where will the rest be coming from? I thought the new FCA rules were that a platform was not allowed to give misleading rates info, investment in first 6 months before defaults sounds like Zopa. The portfolio projection tool tells me that in a "poor" 12 month period the worst to expect is 3%. The bar chart which implies earnings for 2019 (in the past) are sort of in the future "The chart above shows the expected annualised returns, weighted by principal amount, for loan chunks you’ve funded in each calendar year. The chart is updated on a monthly basis. " (I have all settings to flexible, yet my money is queued to go into the growth product. ...!? edit: this is some malingering offer to lend from July 2019 still there in Feb 2020 - I've cancelled it now)
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Post by 673639neil on Feb 1, 2020 20:36:48 GMT
Hi everyone if we are feeling misled and the sort! Instead of just complaining on this forum, can't we all get in contact with the FCA to see if this can be looked in to, and fast?
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..............................not 
