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Post by stevexxx on Dec 10, 2019 19:32:28 GMT
Rule 19-17 seems to have gone as with anything about pooling on the site. Am I missing something or is Pooling loans in the event of PF depletion gone?
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pom
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Post by pom on Dec 11, 2019 11:01:00 GMT
I assume its because pooling was across all loan cohorts, and now returns are dependent on cohort performance.
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Post by stevexxx on Dec 12, 2019 0:37:18 GMT
Are you sure? Why doesn't it say that?.
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johni
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Post by johni on Dec 12, 2019 8:05:49 GMT
Are you sure? Why doesn't it say that?. The lack of comment says it all for me. Pooling has obviously gone and if you have a large amount in 1 loan then through no fault of your own due to changes in terms and conditions all capital in that loan is at risk if the platform folds and the borrower doesn't repay.
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Post by carol167 on Dec 12, 2019 9:39:30 GMT
Are you sure? Why doesn't it say that?. The lack of comment says it all for me. Pooling has obviously gone and if you have a large amount in 1 loan then through no fault of your own due to changes in terms and conditions all capital in that loan is at risk if the platform folds and the borrower doesn't repay.
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jlend
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Post by jlend on Dec 12, 2019 9:44:11 GMT
It is in the updated FAQs
What happens if the Lending Works Shield fails?
If at any time, in the opinion of the Trustee, the Lending Works Shield does not have sufficient funds to satisfy the claims arising from the loans outstanding (a deficit), and, the deficit is not, in the opinion of the Trustee in its sole and absolute discretion, capable of being rectified through the ordinary course of business, the Trustee in consultation with Lending Works may declare a “Pooling Event”. If a Pooling Event occurs, the value of the outstanding deficit will be split or 'pooled' among all existing lenders on a pro-rata basis. Given that lenders rely on the Fair Algorithm for the allocation of their funds, and do not make the choice themselves, we believe the Pooling Event to be the fairest way.
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jlend
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Post by jlend on Dec 12, 2019 9:51:27 GMT
Also worth remembering that in normal circumstances your loan book should not be full of defaults or long term late paying loans.
They loans are settled in full by the PF in normal circumstances.
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From LW website:
"If a loan is 4+ payments in arrears or defaulted at an early stage by the collections team (e.g. Bankruptcy), we class it as in 'default'. Once a loan has defaulted, the Shield will attempt to settle the outstanding balance with relevant investors, while our in-house team or our debt collection partner will continue to work with borrowers to try and make recoveries, including through legal action if required."
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Post by Matthew on Dec 12, 2019 10:01:09 GMT
The lack of comment says it all for me. Pooling has obviously gone and if you have a large amount in 1 loan then through no fault of your own due to changes in terms and conditions all capital in that loan is at risk if the platform folds and the borrower doesn't repay.
Hi all I had not seen this thread so please don't ever read anything into the lack of any comment from me. I do try to come back to questions etc when I can but if you are ever looking for a quick response you're always best getting in touch with the customer experience team directly through the usual channels. The pooling event option was removed as part of the recent Shield changes, primarily as it is no longer necessary. Under the old model, there was no mechanism for the Shield to adjust contributions once loans were written, giving rise to a binary outcome (either it has enough funds to pay out a claim or it doesn't). Given that binary outcome, we had to deal with the potential that at some point there may be insufficient funds to pay out a claim. Under the new model, interest adjustments can be made on a quarterly basis to ensure the Shield always has sufficient funds to pay out on claims - it's much more fluid and achieves the same result in a much fairer way. This also ensures the Shield is able to operate as intended throughout the most difficult of economic scenarios. Note the FAQ referred to has been removed. Thanks
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jlend
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Post by jlend on Dec 12, 2019 10:15:04 GMT
In the however unlikely event that an interest rate reduction is insufficient, is there a pro rata capital reduction across all loans?
It would be useful to have a FAQ on the site about this, to replace the pooling event FAQ that has just been deleted
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Post by Matthew on Dec 12, 2019 10:26:30 GMT
In the however unlikely event that an interest rate reduction is insufficient, is there a pro rata capital reduction across all loans? That would obviously be a last resort but would have to be considered by the Trustee. Note though that lifetime losses would probably need to be c20% for that to happen. This would still be a better outcome than under the old pooling mechanism in my opinion. Thanks
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jlend
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Post by jlend on Dec 12, 2019 10:33:42 GMT
In the however unlikely event that an interest rate reduction is insufficient, is there a pro rata capital reduction across all loans? That would obviously be a last resort but would have to be considered by the Trustee. Note though that lifetime losses would probably need to be c20% for that to happen. This would still be a better outcome than under the old pooling mechanism in my opinion. Thanks Thanks Could you ask the trustees to consider that scenario and put some words on a FAQ, whatever they say, to replace the FAQ that has been deleted? I think it is important in regard to the FCA Principles given the removal of the pooling event may be quite a big thing for some people. 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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Post by stevexxx on Dec 12, 2019 13:07:26 GMT
Pooling was one of the reasons I invested and allowed large chunks of money to be invested in single loans, without pooling and in the event of the collapse of LW I am now very vulnerable to these loans... I never wanted my money being lent in anything other than small chunks I now feel quite vulnerable.... Also when I phoned up just a few days ago I was told categorically that nothing had changed with the pooling system, well it has...
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Post by propman on Dec 15, 2019 23:09:40 GMT
Pooling was one of the reasons I invested and allowed large chunks of money to be invested in single loans, without pooling and in the event of the collapse of LW I am now very vulnerable to these loans... I never wanted my money being lent in anything other than small chunks I now feel quite vulnerable.... Also when I phoned up just a few days ago I was told categorically that nothing had changed with the pooling system, well it has... I agree with Matthew that taking an equal portion of first interest abd, if necessary, capital from all loans in a cohort is pooling allbeit only within a Cohort.
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