Decision time

nicely put, the ultimate question - C2F also promised improvement in due diligence and the same question applies. I try to see similarities between LW and Z (which has no pf) - but then I think the underlying borrowers may be different...? Z has been wobbling a bit because monthly earnings can be down to your luck of the draw as to which borrowers a lender was allocated. So roughly in the timeframe where Z was performing less well there were some negative earnings months, but I've had more + earnings months there over all. So if Z is OK ish ish ish (and your question applies there also), then would LW be so too even if it lost its pf? benaj pointed out an example LW borrower rate >15% - don't know whether that is the average. Might depend upon the value to the borrower - I know on Fund Ourselves, there are some short loans at higher rates and borrowers may use these, pay back earlier in order to improve their credit score. Don't know whether this analysis helps though.

It's a tough one, but I think trying to view this as un-emotionally as possible is the right way forward. A few thoughts:

Re: the future performance of their loan portfolio, I personally find the revised statistics much less helpful in trying to read the runes. From what we can do, well, if we look at the lifetime default rate graph on their stats page it looks like defaults are levelling off for the 2017/2018 cohorts. But even if they are, I just don't know what exactly that will mean for lenders. It's better overall, but how much needs to go to the shield to keep it at zero? I don't think it's possible to calculate that from the information provided.

More subjectively, we know that LW have a high risk appetite at the moment. The average borrower APR has increased sharply, up to 14.0% for 2019, truly very high. 40% of the loans they issue are for debt consolidation. That's not necessarily a bad thing, higher yield might bring higher returns even with more defaults. I'm personally not sure about it though - Zopa+ didn't fare well, and FC D/E loans were an interesting bunch. Again, the revised stats now prevent us from tracking expected v actual by year cohort, so not very helpful.

Re: liquidity, it's probably a fair bet that demand for LW has/will somewhat dampen. They could also be subject to some bad press because of the sellout situation. It's probably worth considering whether you're comfortable with whatever funds you have there being stuck for the long haul. There's definitely a risk of that happening.

Re: platform stability, there's no point pretending there's no risk here, far too many P2P car-crashes around not to. A lack of future investor funds will surely not help their origination and hence future profit, but again that depends on how much (if any) bad press they receive. What the consequence of that risk occurring is I suppose depends on your faith in their wind-down plans.

I'm sure it's coming across that I'm far less confident about this than I was about where the stats were headed last year, and others are far more experienced than I about the ongoing strength of lending operations. If it was my money personally though, I would mostly be concerned about liquidity/platform risk as opposed to loanbook performance in trying to decide.

Tough call, good luck in whatever you decide.

Btw I left too early and paid 1.5%, my crystal ball didn't extend to predicting a fee-free sellout!

I think not having an emotional decision is surely the right one. LW is like any savings fund, it is not short term investment, otherwise we can put at the bank at 0.1 % and can easily draw but return is very little.
I think overtime the shortfalls fees should reduce and interest rate should come back to normal, people have to average what they have earned so far on interest and how much it represents if you annualized , it is still pretty good on my side. 
People are talking about complaining to fca but it would make things more difficult like said by some people on this forum. Some are complaining because LW did anticipate the shield that was not big enough and they are probably the same people that would have complain even more if LW would have done nothing with much bigger consequences.


So all in all, disappointed to have this period of lower rate and higher shortfall fees but I prefer to wait and see, i prefer to have my arrears paid off and a lower rate interest rate.

Very good point. The silence speaks volumes. They haven't even had the basic decency to apologise to lenders for monumentally ****ing up. Unless I missed it?

I ummed and ahhed - and have now requested a sell out for everything bar the 10% not currently sellable.
Reduces my all-time XIRR to 3.66% on LW (assuming the 10% is eventually returned via the replenished Shield)
But I get peace of mind (for 90% of capital a least).  I think the platform risk is now too high for the 2-3% I would have been getting for the forseeable.
Although I won't feel totally safe until the loan chunks are actually sold. 

Edit: The actual hit to sell will be 5.26%+0.5% (total of £876 out of lifetime platform ISA interest of £3080)

Thanks roolish67. That's my primary concern - losing a portion or whole of my initially invested sum. ROI is important, but not the most important factor. I originally chose LW because I saw it as lower risk, but that is no longer the case. 

Now the question will be what to do with my withdrawn sum (assuming there is liquidity). Of the remaining p2p companies I'm in, I'm nervous about defaults at Kuflink and monitoring closely, RS is verging on too low a return for the risk, and I like AC but feel I'm too heavily invested. I'm too heavily invested in S&S's for my liking (hence why I came to p2p originally) although my Vanguard Lifestrategy fund has returned 12% in the last year. So perhaps back to a regular savings account although the interest rate is so low these days. What are others doing?

I have the same conundrum. If I exclude some cash set aside for property, I'm roughly 60/30/10 equities/cash/P2P, which is I think where I'm most comfortable at the moment.

Cash isn't so bad a place to be really I suppose, esp. if you're in fixed rate terms. 1.8%-2% p.a when inflation is 1.4% is at least a positive real return. By comparison, a year ago or so we were underwater with circa 2% return and 2.5%+ inflation.