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Post by befuddled on Jan 20, 2020 15:22:01 GMT
So if there are bad loans in your account when you try to sell, those loans are filtered out and not sold, so in my case about 5% remains unsold and it seems unsellable.
It was my understanding the "shield" would pick up these loans and act as a buffer to protect me from any bad loans ...
I read from here and other places the shield is running low, does anyone know if it has ceased to function.
It's starting to feel very much like the situation at Funding Circle. Hotel California...
Absolutely not regretting decision to get out, if I have lost 5% it will have negated any benefit to having used LW...
I don't know if that makes me lucky or unlucky
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Post by gravitykillz on Jan 20, 2020 15:40:16 GMT
So if there are bad loans in your account when you try to sell, those loans are filtered out and not sold, so in my case about 5% remains unsold and it seems unsellable. It was my understanding the "shield" would pick up these loans and act as a buffer to protect me from any bad loans ... I read from here and other places the shield is running low, does anyone know if it has ceased to function. It's starting to feel very much like the situation at Funding Circle. Hotel California... Absolutely not regretting decision to get out, if I have lost 5% it will have negated any benefit to having used LW... I don't know if that makes me lucky or unlucky There are no available stats for 2020 but on 31st Oct 2019 the shield had a balance of 400k which is ridiculously low for loans of £90 million and above. I personally would not invest in lending works until the shield had £2 million minimum. If even 1% of the loans go bad it would more than wipe out the shield possibly even the company. The stats should be updated at the end of this month.
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Post by gravitykillz on Jan 20, 2020 15:46:05 GMT
Lending works are possibly trying not to put too much pressure on the shield by dumping the investors with these bad loans.
As the lower the shield gets the more investors will flee the company.
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r00lish67
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Post by r00lish67 on Jan 20, 2020 16:03:35 GMT
So if there are bad loans in your account when you try to sell, those loans are filtered out and not sold, so in my case about 5% remains unsold and it seems unsellable. It was my understanding the "shield" would pick up these loans and act as a buffer to protect me from any bad loans ... I read from here and other places the shield is running low, does anyone know if it has ceased to function. It's starting to feel very much like the situation at Funding Circle. Hotel California... Absolutely not regretting decision to get out, if I have lost 5% it will have negated any benefit to having used LW... I don't know if that makes me lucky or unlucky Is this really true, are LW really retaining unsellable loans? Anyone else have this experience, or can Matthew confirm/deny? It doesn't sound right, and although I don't track things here as closely as I used to, it wasn't my understanding that this could happen unless the shield is fully depleted. I can't see any reference to it on their website . It says that for a growth account you'll be charged 0.5% + any difference in rate between your loans and the current rate. Nothing about leaving scraps of loans as unsellable. befuddled - what does it say if you try to quick sell your unsold loans now? or is it greyed out or something?
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Post by Matthew on Jan 20, 2020 16:20:05 GMT
So if there are bad loans in your account when you try to sell, those loans are filtered out and not sold, so in my case about 5% remains unsold and it seems unsellable. It was my understanding the "shield" would pick up these loans and act as a buffer to protect me from any bad loans ... I read from here and other places the shield is running low, does anyone know if it has ceased to function. It's starting to feel very much like the situation at Funding Circle. Hotel California... Absolutely not regretting decision to get out, if I have lost 5% it will have negated any benefit to having used LW... I don't know if that makes me lucky or unlucky Is this really true, are LW really retaining unsellable loans? Anyone else have this experience, or can Matthew confirm/deny? It doesn't sound right, and although I don't track things here as closely as I used to, it wasn't my understanding that this could happen unless the shield is fully depleted. I can't see any reference to it on their website . It says that for a growth account you'll be charged 0.5% + any difference in rate between your loans and the current rate. Nothing about leaving scraps of loans as unsellable. befuddled - what does it say if you try to quick sell your unsold loans now? or is it greyed out or something? Hi all Apologies for my lack of contact recently but I have been in and out due to paternity leave. I try to respond to queries when tagged etc but as always, if you need any quick response on any issues please contact customer services as that is always the most efficient channel for questions. I think there is some misunderstanding here about loans in arrears and the Shield etc. As a bit of background, the FCA's new P2P rules seek to protect retail investors from unknowingly acquiring loans via a secondary market in various states of delinquency. This obviously has the knock on impact to any selling investor. One option to ensure fairness would be to re-value (downwards) the loans being sold, based on some assessment of the likelihood they will repay at any point in time. This is further complicated by the Shield, since this should ensure individual defaults are not actually incurred by the investor. We've opted for a different approach which is to require the selling investor to hold those loans until either the loan recovers (at which point it can be sold) or the loan is charged off (in which case the Shield will settle the outstanding balance). The delay caused by holding loans which are currently in arrears has nothing to do with the available funds in the Shield. It reflects the fact that the loan has not yet been charged off - a process has to be followed and appropriate borrower communications, notices and timeframes need to be adhered to. The new Shield model should ensure that there are always sufficient funds to cover defaults as they arise - the main variable would be the net returns achieved by investors (obviously the higher the losses, the lower the returns and vice versa). The cash balance at any point in time does not summarise the ability of the Shield to cover defaults - for example, at the last statistics update around £5.4m of income on loans is available for covering future losses. I appreciate it's frustrating that you cannot immediately access all funds invested, however if you put yourself on the other side of the fence, you're also not going to pick up loans in arrears when increasing your investment. In the normal course of business, loans are charged off within 6 months of falling into arrears and sometimes much more quickly. Many thanks
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Post by gravitykillz on Jan 20, 2020 16:55:27 GMT
So according to matt you should recover your funds within 6 months or less.
I'm not sure if this model is better than the previous model. So if loans go bad investors could be holding on to them for 6 months now !
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benaj
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Post by benaj on Jan 20, 2020 17:15:47 GMT
Selling loans on LW is usually quick. I took the advantage of 0% fee back in December and received 100% back within 48 hours. No Transaction fee (0.5%) & No Interest shortfall discount back then. As always, LW shield covers repayment for late loans, transaction can be tracked in transaction history. 
Those who decide to sell the loans, there will be 0.5% fee and possibly up to 4.3% average interest shortfall. When I sold my Zopa Plus, average shortfall was 1.3%, this 4.3% shortfall may be unexpected for many LW investors.  |
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Post by Matthew on Jan 20, 2020 17:26:43 GMT
So according to matt you should recover your funds within 6 months or less. I'm not sure if this model is better than the previous model. So if loans go bad investors could be holding on to them for 6 months now ! This is not really linked to the new Shield model, though it was released at the same time. This is related to the new P2P rules and the requirements around secondary market transfers. The alternative would be to allow sales at all times but at a discounted price, which some may prefer but would be difficult to price in practice.
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IFISAcava
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Post by IFISAcava on Jan 20, 2020 18:22:05 GMT
Selling loans on LW is usually quick. I took the advantage of 0% fee back in December and received 100% back within 48 hours. No Transaction fee (0.5%) & No Interest shortfall discount back then. As always, LW shield covers repayment for late loans, transaction can be tracked in transaction history.
Those who decide to sell the loans, there will be 0.5% fee and possibly up to 4.3% average interest shortfall. When I sold my Zopa Plus, average shortfall was 1.3%, this 4.3% shortfall may be unexpected for many LW investors. Very unexpected - previously it was the difference between loans at say 6.5% and 6% - 0.5% or so. Why so much larger now?
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benaj
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Post by benaj on Jan 21, 2020 8:56:34 GMT
www.lendingworks.co.uk/peer-to-peer-lending/how-it-worksMatthew, could you please clarify a couple of things for investors? 1. There is no interest shortfall for early access in the Fleixble 2. The Growth return rate was 6.5% a couple of months ago, could you tell us why average 4.3% interest shortfall is justified when accessing fund early? I certainly can't remember receiving 4.3% interest shortfall when I joined Lending works for picking up loans from another investors.
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Post by Matthew on Jan 21, 2020 10:56:46 GMT
www.lendingworks.co.uk/peer-to-peer-lending/how-it-worksMatthew , could you please clarify a couple of things for investors? 1. There is no interest shortfall for early access in the Fleixble 2. The Growth return rate was 6.5% a couple of months ago, could you tell us why average 4.3% interest shortfall is justified when accessing fund early? I certainly can't remember receiving 4.3% interest shortfall when I joined Lending works for picking up loans from another investors. Hi benaj1. It is completely fee-free to sell loans within the Flexible product. Lending Works also covers any interest rate shortfall. 2. Yields are calculated over the lifetime of the loans. Therefore future interest rates on some loans can be lower than the overall expected yield (since a substantial portion of the overall interest may have already been received) and it is this which drives the discount when selling to new investors expecting 4%/5.4% on new loans. The delta is higher currently than it will be going forward due to the one-off transition to the new Shield model. In the future, rates will be adjusted by small increments as necessary throughout the full life of each cohort, rather than retrospectively against prior cohorts. Hope this helps.
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jlend
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Post by jlend on Jan 21, 2020 13:22:13 GMT
www.lendingworks.co.uk/peer-to-peer-lending/how-it-worksMatthew , could you please clarify a couple of things for investors? 1. There is no interest shortfall for early access in the Fleixble 2. The Growth return rate was 6.5% a couple of months ago, could you tell us why average 4.3% interest shortfall is justified when accessing fund early? I certainly can't remember receiving 4.3% interest shortfall when I joined Lending works for picking up loans from another investors. Hi benaj 1. It is completely fee-free to sell loans within the Flexible product. Lending Works also covers any interest rate shortfall. 2. Yields are calculated over the lifetime of the loans. Therefore future interest rates on some loans can be lower than the overall expected yield (since a substantial portion of the overall interest may have already been received) and it is this which drives the discount when selling to new investors expecting 4%/5.4% on new loans. The delta is higher currently than it will be going forward due to the one-off transition to the new Shield model. In the future, rates will be adjusted by small increments as necessary throughout the full life of each cohort, rather than retrospectively against prior cohorts. Hope this helps. Hi MatthewAm not sure this was made clear in November. Would many people have been better off selling out fee free, at less of a discount, and then reinvesting sometime in the future if they wanted to? One of the FCA guiding principles for platforms is 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 befuddled on Jan 21, 2020 16:56:17 GMT
Hi benaj 1. It is completely fee-free to sell loans within the Flexible product. Lending Works also covers any interest rate shortfall. 2. Yields are calculated over the lifetime of the loans. Therefore future interest rates on some loans can be lower than the overall expected yield (since a substantial portion of the overall interest may have already been received) and it is this which drives the discount when selling to new investors expecting 4%/5.4% on new loans. The delta is higher currently than it will be going forward due to the one-off transition to the new Shield model. In the future, rates will be adjusted by small increments as necessary throughout the full life of each cohort, rather than retrospectively against prior cohorts. Hope this helps. Hi Matthew Am not sure this was made clear in November. Would many people have been better off selling out fee free, at less of a discount, and then reinvesting sometime in the future if they wanted to? One of the FCA guiding principles for platforms is 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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alanh
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Post by alanh on Jan 21, 2020 17:15:00 GMT
I got out of LW at the end of November when the latest statistics were published with a view to possibly re-investing at some point in the future if and when the provision fund recovers. Based on the other posts on this thread that day is going to be a long way off. To not communicate correctly the fact that you may be stuck with unsalable loans and may also have to make up large interest rate shortfalls is completely unacceptable. I liked LW but this is absolutely terrible and has a huge impact on investors decisions. It is a significant change from the previous (pre end Nov) way of doing things and yet LW decided not to tell anyone? It has only become apparent from the posts on this forum. Couple all that with the fact that provision fund statistics etc are now only released quarterly rather than monthly and you seem to have a platform heading backwards (rapidly).
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Post by befuddled on Jan 21, 2020 17:26:30 GMT
So first time I tried to sell everything, £151.06 was left behind when I try to sell the remaining £151.06 I get this..  When I sold out I was expecting to pay the .5% fee When I invested I was earning maybe 5.5% (not exactly sure, can't remembered, was last summer), but as the rates have gone down for new investors I don't understand why I am paying a shortfall - even after reading posts above. The situation is the opposite of a short fall I am not overly concerned, but this does reinforce my negative view on P2P and glad to be out relative unscathed and will put it down to experience. Annoying that I may have to wait six months to sell these loans - as have to transfer the whole lot in one go as transferring as an ISA I wasn't aware of the free sellout in December - would definitely have taken advantage of it. My advice to anyone, don't believe the 0.5% sell out fee, in reality the fee (or however it is described) is massive higher, and significantly higher than most other P2P platforms The empirical costs are as below. This was a single transaction, money deposited in one hit, and attempted to be withdrawn in one hit (failed). Interest rates were higher when investment made, so there is no legitimate short fall to cover  |
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