macq
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Post by macq on Jan 28, 2020 13:03:00 GMT
Not sure there a financial whizz (or even correct) but someone has started a thread on the MSE savings forum this morning with analysis of their withdrawal and how new loans work now etc The other problem for LW could be if the explanation is not quite right but it gets mentioned on MSE you are hitting a wider public (i would guess)
Thanks for the headsup, but I'm not sure what he has written is accurate either. If it is - then it's even worse than I thought and was clearly never explained properly by LW.
think thats the problem and i did post at the time - but if you are going to advertise a Blackbox ISA with Two rates then you would expect retail investors as Matthew calls them to expect an easy product with the rates advertised. While it maybe true that the new method is better for the provision fund and investors in the long run,you can not expect the average punter who is not looking at self select loans to know about cohorts or the methods of how the provision fund is running now and before or how the advertised rates seem not to mean what they mean without digging deep in the terms
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Post by carol167 on Jan 28, 2020 16:14:36 GMT
Just for info...
Given the amount of interest my ISA account gets each month - fairly static as I haven't added any to the capital for a year or two...
I can see that January's increase so far, and hence amount of interest this month, is running at 38% of what it would have been.
So the interest rate has more than halved for January and has yielded only 0.2%, which x 12 = 2.36% down from circa 6% last year.
Three more days to go, I don't see that improving much.
[Edit: I was miffed enough in December thinking that it was only going to be 5.4% going forward. Now I'm pretty livid....]
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ashtondav
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Post by ashtondav on Jan 31, 2020 9:48:56 GMT
But the email i have just received tells me my "weekly rate" in Growth is 5.4%. It's not qualified with "projected", "estimated" or "guesstimated".
It just displays 5.4%. Shouldn't that email be, er, edited somewhat. Maybe "up to 5.4%" or between "3% and 5.4%?
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Post by frankfurt13 on Jan 31, 2020 13:54:44 GMT
But the email i have just received tells me my "weekly rate" in Growth is 5.4%. It's not qualified with "projected", "estimated" or "guesstimated".
It just displays 5.4%. Shouldn't that email be, er, edited somewhat. Maybe "up to 5.4%" or between "3% and 5.4%?
"We'll tell you what rate you're getting after we've lent it out and trapped you with interest shortfall".
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Post by 673639neil on Jan 31, 2020 16:12:58 GMT
I believe lending works, as a company have upset a great deal of the investor base, at best I feel I was misled in to thinking the rate would just fall to 5.4% at worst I was outright lied to to prevent me from removing my funds, I was disappointed thinking the rate was going to be 5.4%, I am livid to find that in January I only got at best 1.5% in my case this equates to a £400 loss just for January alone,
I am taking my case to the financial ombudsman service, as I feel the old loans should stay at the percentage when took out and new loans at 5.4%
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Post by carol167 on Jan 31, 2020 16:23:46 GMT
I believe lending works, as a company have upset a great deal of the investor base, at best I feel I was misled in to thinking the rate would just fall to 5.4% at worst I was outright lied to to prevent me from removing my funds, I was disappointed thinking the rate was going to be 5.4%, I am livid to find that in January I only got at best 1.5% in my case this equates to a £400 loss just for January alone,
I am taking my case to the financial ombudsman service, as I feel the old loans should stay at the percentage when took out and new loans at 5.4%
Well said. You and me both. I also thought it was going to be 5.4 going forward and that it would just be continuing with 0.5% fee to cash out. That was livable with, we'd been saying for sometime rates needed to drop. If I'd have realised what they were actually doing I'd have cashed out in December when we had the opportunity.
I would like to see them re-offering the free cashout option from December now that we actually properly understand the ramifications and just how disadvantageous the changes are to existing investors.
I'm just waiting to see what the January statement says before I make a formal complaint.
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Post by jono75 on Jan 31, 2020 16:47:54 GMT
I only made my first investment with LW believing that any rate adjustments only affects loans from the present, not retrospectively. I would not have invested knowing this.
Thankfully I only put in a relatively small investment and the shortfall doesn't affect me too much (strangely it does affect me in a small way even though it's always been 5.4% for me so far.) Pretty annoyed that I have over 10% of my investment was put into loans already in arrears that I can't sell so I can't make a clean escape.
My plan now is to wait until the shortfall fee + .5% fee does not put me in the red. Withdraw those loans if I can, then wait for the others to default some time next decade as one is already over six months late and not in default, presumably so they can keep their stats looking better!
My guess is that existing lenders Jan statements will show as 5.4% earned and not take into account the new interest rate shortfall system, as they will say that is only if you withdraw early and P2P should be seen as a long term investment as per company comments.
What they should do now is to have an amnesty and allow lenders to use the old shortfall system for a month if they want to escape and waive the .5% fee, oh and change their website to make everything much clearer.
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Post by df on Jan 31, 2020 16:49:55 GMT
It's all depends on your "current loan performance". Depending the origination of cohort, if they perform like real 5.4% loans, i.e. your monthly interest, it should be 0% shortfall. If it perform like 0%, it could be 5.4%. Ace reported a shortfall of 6.5% for his remaining 11% of investment, it would be interest to see the performance of his remaining loans. The big question is? how big can this shortfall be? can it be higher than the borrower rate, average 12.9% APR? I really hope someone from LW could clarify this, Matthew ? Yep, just rechecked now. 26.5% unsellable. To sell the remaining 73.5% would cost a 0.5% transaction fee plus a 6.5% shortfall fee. Hitting "View Loans" shows a forecast of 4.9% for my 2019 cohort and 5.4% for my 2018 cohort. No way of knowing the size of each cohort in this once very useful, but now useless interface, so these stats are also useless. I've now lost my patience with this platform and have switched off relending. Mine shows 5% for 2018 and 5.1% for 2019 (nothing for 2017). I've been investing in higher rate products only, it was 6% and later changed to 6.5%. The bulk of my funds was invested at 6%, but I didn't think cash drag could bring it down to 5%, considering most of my LW funds were invested at the time when the queue was less than two weeks. I'm not sure what's going on, but will turn my re-lending off for now until I know what rate I'm lending at.
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r00lish67
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Post by r00lish67 on Jan 31, 2020 16:58:49 GMT
Well said. You and me both. I also thought it was going to be 5.4 going forward and that it would just be continuing with 0.5% fee to cash out. That was livable with, we'd been saying for sometime rates needed to drop. If I'd have realised what they were actually doing I'd have cashed out in December when we had the opportunity.
I would like to see them re-offering the free cashout option from December now that we actually properly understand the ramifications and just how disadvantageous the changes are to existing investors.
I'm just waiting to see what the January statement says before I make a formal complaint.
Out of interest, I had a quick re-read of the e-mail sent on 29/11/19. The key bit seems to be where it says: "These changes will also result in an adjustment to the interest rates on the existing loan portfolio, with interest rates reducing from an average of 5.2% p.a. to 4.8% p.a" As I now understand it from discussion this forum, that statement is probably technically correct given that it apparently covers all year cohorts and includes returns already earned as well as (perhaps?) an assumption that rates will again be improved from H2 2020. However, there's no way I would have guessed all of this from the email alone, and even the updated terms and conditions wouldn't have given me a clue. So perhaps whether a complaint is successful to LW and ultimately the Ombudsman (if required) is whether the impact of these changes were explained clearly enough to existing investors. The revised T's and C's do cover the mechanism by which such changes can take place, but again I couldn't see any specific reference to the impact to existing investors these changes would have (and I wouldn't expect to see them there, tbh). As a fairly impartial ex-investor with no grudge to bear with LW, I tend to think they weren't clear enough. I already had prior knowledge that adjustments would be required to support the LW PF, yet I still only understood (incorrectly) that there would be a minor haircut from some existing lender returns. It seems a real stretch to expect a typical lender to have inferred the various caveats and assumptions behind that one small part of the note. In my mind, that very brief part of the e-mail should have been expanded upon significantly to explain the short-term impact for a range of different lenders.
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Post by befuddled on Jan 31, 2020 18:38:10 GMT
...... oh and change their website to make everything much clearer. I think it is too complex for LW to explain, or put another way, if they tried to explain the reality in terms the average person understood it would be a dossier, and would put people off (..as it it darned well should....!). LW may have totally underestimated the value of their loans, and no doubt had to change their way of operation, but to do it in such a complicated, convoluted and secretive way is unacceptable. ...if they had come clean, said the cupboard was empty, rates have to decrease - I suppose we'd have been unhappy, but we'd have understood and accepted the situation, but this backdated average interest system is totally flawed, so they give back dated lower interest at the beginning of investment (because they messed up the shield/default expectations), and we are expected to believe things will be rosy in the future and they will be able to pay above average rates later to maintain the average at 5 years. Yeah right, talk about kicking the (bad news) can down the road... Why don't LW comment on any of these negative posts - maybe they know there is worse to come...?
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kathy
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Post by kathy on Jan 31, 2020 20:04:09 GMT
I now have absolutely no confidence in LW. Hubby took all his money out in December but we felt it would be OK to leave mine in and just accept the drop to 5.4%. Having been made aware that the truth is somewhat different to what many of us have been led to believe I looked at selling up and nearly spilt my Horlicks when I saw the interest adjustment of nearly £700 on investments of about £12k!
I now don't know whether to just draw down as capital and interest are paid back or take the hit and get out before anything worse happens.
Once out I won't be coming back to LW any time soon, as they clearly can't be trusted.
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Post by carol167 on Jan 31, 2020 20:25:10 GMT
If we'd have been told that we would only be getting around 2.3% going forward and that to cash out would be a huge hit (despite loaning our money to loans on a higher % than 5.4) there is no way I would have agreed to that and not cashed out in December.
I feel we have been well and truly duped and now we're trapped.
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Post by carol167 on Jan 31, 2020 20:48:33 GMT
I now have absolutely no confidence in LW. Hubby took all his money out in December but we felt it would be OK to leave mine in and just accept the drop to 5.4%. Having been made aware that the truth is somewhat different to what many of us have been led to believe I looked at selling up and nearly spilt my Horlicks when I saw the interest adjustment of nearly £700 on investments of about £12k! I now don't know whether to just draw down as capital and interest are paid back or take the hit and get out before anything worse happens. Once out I won't be coming back to LW any time soon, as they clearly can't be trusted.
£700 on 12k is about 5.8%.
Are we really being asked to give up about a years worth of interest to cash out now ? 
Who on earth would set that sort of punitive measure and not expect a backlash from their alienated investors ?
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Post by 673639neil on Jan 31, 2020 21:07:07 GMT
I now have absolutely no confidence in LW. Hubby took all his money out in December but we felt it would be OK to leave mine in and just accept the drop to 5.4%. Having been made aware that the truth is somewhat different to what many of us have been led to believe I looked at selling up and nearly spilt my Horlicks when I saw the interest adjustment of nearly £700 on investments of about £12k! I now don't know whether to just draw down as capital and interest are paid back or take the hit and get out before anything worse happens. Once out I won't be coming back to LW any time soon, as they clearly can't be trusted.
£700 on 12k is about 5.8%.
Are we really being asked to give up about a years worth of interest to cash out now ?
Who on earth would set that sort of punitive measure and not expect a backlash from their alienated investors ?
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Post by 673639neil on Jan 31, 2020 21:11:31 GMT
For me to cash out would now cost me circa £6960.00 that is assuming that I could sell all the loanbook. and assuming anyone else would now be daft enough to buy in, now we know the facts,
Shame on you lending works!
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