ashtondav
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Post by ashtondav on Dec 5, 2019 15:12:06 GMT
In terms solely of "risk" is there any difference between the 90day account and QAA? In other words if "Business As Usual" came to a grinding halt aren't withdrawals from every account stopped or slowed, or is priority given to QAA, then 30 day and finally 90 day?
In other words if (a la FC) delays went to 3 months the QAA account becomes a 90 day account and the 90 day account becomes a 180 day account. The only difference is the 3 months, so if you are unlikely to be in need of funds for, say 6 months, there is no advantage in using the QAA. This is especially the case if you are in 90 day and immediately issue a withdraw order - where you'd average a 45 day account.
Or am i muddled (highly likely)
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ceejay
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Post by ceejay on Dec 5, 2019 15:27:40 GMT
In terms solely of "risk" is there any difference between the 90day account and QAA? In other words if "Business As Usual" came to a grinding halt aren't withdrawals from every account stopped or slowed, or is priority given to QAA?
In other words if (a la FC) delays went to 3 months the QAA account becomes a 90 day account and the 90 day account becomes a 180 day account. The only difference is the 3 months, so if you are unlikely to be in need of funds for, say 6 months, there is no advantage in using the QAA. This is especially the case if you are in 90 day and immediately issue a withdraw order - where you'd average a 45 day account.
Or am i muddled (highly likely)
Depends what you mean by "grinding halt". If you mean it literally - conditions have become so bad that there is no liquidity at all - then there's not a lot of difference, AIUI. We all have to wait for the underlying loans to repay (or not). However, in the more likely case of liquidity becoming merely somewhat problematic, so those wanting out are having to form an orderly queue, then those in the shorter markets will have the advantage of immediately being nearer the front. I believe that in this case it's a simple queue according to when you "should" have got your money out. And, in the still less serious event that things have merely become a little bit whiffy, those in QAA have the option of getting the hell out while those in 30DAA and 90DAA will have to sweat.
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blender
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Post by blender on Dec 5, 2019 15:35:07 GMT
This is a really good question and I would be keen to hear an answer from someone who has some knowledge of AC's workings. Personally I have 90DAA accounts and QAA on the basis that in times of need I can get access to the QAA quicker, and would not like to think of the dates for everything going out together. The problem comes when there is not sufficient cash to pay withdrawal requests as they mature, which means immediately for QAA and after 90 days from request for 90DAA. With a shortage of cash you would expect some sort of priority system which does not extend all withdrawal requests equally, but has some regard to the relative notice periods. If you paid everything a day late then I guess you would be extending the actual period of QAA by, say 100% plus, but extending the period for 90DAA by about 1%, which would not be reasonable given the difference in interest rates. So I would expect a system which favours the QAA in 'abnormal' times to some extent. I would like to know how.
Did not see Ceejay's. I do not think a simple queue would give sufficient priority to QAA. I would have a queue for each account type and would ration the amount going into each account type in some way - probably using some division which can be set by a human, who would have some knowledge of the 'market conditions' and the appropriate response.
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Post by banffy on Dec 5, 2019 15:41:36 GMT
Pick A or B, just my thought on AC if it were to go down the pan (At any stage)
A. You will be able to withdraw all your money after 90 Days. cough cough
B. The whole site will be Frozen and you will then be tied in all them loans and defaults and basically you will be screwed and get peanuts.
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blender
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Post by blender on Dec 5, 2019 15:49:43 GMT
Pick A or B, just my thought
A. You will be able to withdraw all your money after 90 Days. cough cough
B. The whole site will be Frozen and you will then be tied in all them loans and defaults and basically you will be screwed and get peanuts.
Did you mean to post this on the FC board? The system sounds familiar.
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jlend
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Post by jlend on Dec 5, 2019 17:00:21 GMT
From the AC website
AC bolded the text, not me. I think this was added after the launch of the account. IMHO this infers the 90DAA is higher risk. The PF is materially lower in the 90DAA vs the QAA and 30DAA as at the last update from AC.
"Due to the 90DAA target interest rate being higher than either the QAA or the 30DAA, the contributions to the 90DAA Provision Fund will be smaller than the contributions to the Provision Funds of those other accounts. This means that the 90DAA Provision Fund will not grow as quickly as the Provision Funds of other accounts which offer a lower target interest rate. The size of any Provision Fund directly affects the coverage which it can provide in the event of loss.
The cash balance held in the Provision Fund for the 90DAA was £346,000 as at 30 September 2019."
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IFISAcava
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Post by IFISAcava on Dec 5, 2019 17:03:23 GMT
From the AC website AC bolded the text, not me. I think this was added after the launch of the account. IMHO this infers the 90DAA is higher risk. The PF is materially lower in the 90DAA vs the QAA and 30DAA as at the last update from AC. "Due to the 90DAA target interest rate being higher than either the QAA or the 30DAA, the contributions to the 90DAA Provision Fund will be smaller than the contributions to the Provision Funds of those other accounts. This means that the 90DAA Provision Fund will not grow as quickly as the Provision Funds of other accounts which offer a lower target interest rate. The size of any Provision Fund directly affects the coverage which it can provide in the event of loss.The cash balance held in the Provision Fund for the 90DAA was £346,000 as at 30 September 2019." Are there many examples (E&O E) of higher return not being related to higher risk one way or another?
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blender
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Post by blender on Dec 5, 2019 17:31:14 GMT
This is interesting, thanks, but does not the provision fund determine how much we get back (of losses) rather than which accounts have liquidity during times of limited cash.
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sl75
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Post by sl75 on Dec 5, 2019 17:56:40 GMT
As food for thought - if the exact same pattern were to have been followed for AC's QAA/90DAA as had happened over at FC for its sales:
A "QAA" investor who requested a withdrawal the very day that thread was posted would have experienced a 58 day delay, receiving their money on 11/6/19
A "90DAA" investor wouldn't even be joining the withdrawal queue until July 13, by which point no money was received before the withdrawal system was changed.
The last day from which sales occurred on the "old system" at FC was 13/6/19, with the final sale occurring on 1/12/19, a 171 day delay. A 90DAA investor would have needed to have requested the sale 90 days before that, on 15 Mar (30 days BEFORE that thread was posted), giving a total delay between initiating the withdrawal request and getting the money of 90 + 171 = 261 days.
A QAA investor who requested their money on the same day as the 90DAA investor (15 Mar) would have received their money after 42 days on 26/4/19.
Data seems fairly sporatic around that period, but safe to say a QAA investor would have got their money within about 2-3 weeks if they'd IMMEDIATELY reacted to the first questions about delays by requesting a withdrawal.
A 90DAA investor initiating a withdrawal on 30 Jan would have entered the queue on 30 Apr, and got their money after 90 + 58 days on 28/6/19
Obviously that's with huge caveats for using data from one marketplace as though it would apply directly in a completely different one, but it illustrates how things might pan out - if a 90DAA doesn't react very quickly to the first signs of trouble, they'll probably not get their money before the whole system has to be changed.
In practical terms, I'd anticipate that ongoing liquidity problems could be one reason for "Series 1" access accounts to close to new investment, with all new investment, newly-swept funds, etc. going via "series 2" accounts (or from 3rd party underwriters in cases where there's insufficient spare funds in the series 2 portfolio). The "Series 2" accounts would be backed by an entirely independently-managed portfolio of loans, and not contain any defaults or suspended loans etc. (until a loan it acquires later becomes suspended). All withdrawals from "Series 1" investors would be funded by a combination of borrower repayments/recoveries and sales at par (with the series 2 accounts' underlying portfolio being a significant buyer at any point that it wants to increase its diversification, but still prioritising its funds for going towards new loans).
Later into the wind-down, the current withdrawal system might be stopped entirely in favour of returning a pro-rata share to ALL "series 1" investors to be handled according to the "on repayment" instruction (with "reinvest in series 2" being the default for anyone who hadn't selected anything else). At that point, anyone who wanted a faster withdrawal would need to offer a discount, and would then get a pro-rata share of any sales the Access Accounts' portfolio could achieve at that level of discount... possibly with anyone who hadn't cancelled an existing withdrawal request being deemed to accept a given published discount.
Thinking it through, it seems to me that AC's systems are better positioned to handle these kinds of transitions than FC's were.
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jlend
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Post by jlend on Dec 6, 2019 9:43:26 GMT
From the AC website AC bolded the text, not me. I think this was added after the launch of the account. IMHO this infers the 90DAA is higher risk. The PF is materially lower in the 90DAA vs the QAA and 30DAA as at the last update from AC. "Due to the 90DAA target interest rate being higher than either the QAA or the 30DAA, the contributions to the 90DAA Provision Fund will be smaller than the contributions to the Provision Funds of those other accounts. This means that the 90DAA Provision Fund will not grow as quickly as the Provision Funds of other accounts which offer a lower target interest rate. The size of any Provision Fund directly affects the coverage which it can provide in the event of loss.The cash balance held in the Provision Fund for the 90DAA was £346,000 as at 30 September 2019." Are there many examples (E&O E) of higher return not being related to higher risk one way or another? Let me know when you find some 😊
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oxdoc
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Post by oxdoc on Dec 12, 2019 22:45:47 GMT
In other words if (a la FC) delays went to 3 months the QAA account becomes a 90 day account and the 90 day account becomes a 180 day account. The only difference is the 3 months, so if you are unlikely to be in need of funds for, say 6 months, there is no advantage in using the QAA. This is especially the case if you are in 90 day and immediately issue a withdraw order - where you'd average a 45 day account.
It's not obvious to me that this is how it would work - it could be that withdrawals from the 90 day account are queued according to when the withdraw instruction is placed i.e. if the withdrawal time for the QAA account were over 90 days, then there would be no difference to withdrawing from the 90 day account - this would still fulfil the condition that withdrawals from the 90 day account would take at least 90 days. Whilst it would seem to make sense to give priority to QAA withdrawals placed at the same time, I don't think it's obvious how withdrawals from different accounts made at different times should be prioritised. AC should have a clear rule for what will happen in this situation - it would be good to hear what it is.
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Post by chris on Dec 13, 2019 8:27:16 GMT
Withdrawals are queued from the moment they fall due. So if a QAA user requested a withdrawal seconds before a 90DAA withdrawal was due to be processed, then it would be queried ahead of the 90DAA withdrawal.
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ashtondav
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Post by ashtondav on Dec 13, 2019 8:28:03 GMT
Yes i thought under the new rules there would be more transparency. But no, still a bit murky which is a shame as AC are one of my favourite platforms.
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Post by Ace on Dec 13, 2019 9:11:54 GMT
Yes i thought under the new rules there would be more transparency. But no, still a bit murky which is a shame as AC are one of my favourite platforms. How much clearer could it be? Each access account does exactly what it says on the tin. QAA withdraw requests are queued for processing immediately. 30 day withdraw requests are queued for processing 30 days after the request is made. 90 day withdraw requests are queued for processing 90 days after the request is made. How long the requests in the queue take to process will depend on conditions at the time. I don't see how it could be any other way.
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jlend
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Post by jlend on Dec 13, 2019 9:56:46 GMT
An FAQ including a few worked examples on the AC website would help I think.
It is what it is. At the moment rightly or wrongly quite a few people seem to be confused and in some cases have different ideas about how it works.
This should be a simple thing for AC to address.
One of the FCA's principles for regulated companies is
7 Communications with clients
A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.
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