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Post by carol167 on Feb 7, 2020 18:03:06 GMT
Can someone please explain why....
If total earnt interest in my ISA account from May 2017 to Jan 2020 = £4890.58
Why have I had to sacrifice £2771.25 in interest shortfall ? That is more than 50% of all my interest.
That is on top of the £238.16 in 0.5% fees.
I get that if a loan was paying me 6.5% (and not all were) I have to sacrifice the difference between 6.5 and 5.4
That would not amount to over 50% sacrifice. What am I not understanding ?
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IFISAcava
Member of DD Central
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Post by IFISAcava on Feb 7, 2020 18:08:32 GMT
Can someone please explain why....
If total earnt interest in my ISA account from May 2017 to Jan 2020 = £4890.58
Why have I had to sacrifice £2771.25 in interest shortfall ? That is more than 50% of all my interest.
That is on top of the £238.16 in 0.5% fees.
I get that if a loan was paying me 6.5% (and not all were) I have to sacrifice the difference between 6.5 and 5.4
That would not amount to over 50% sacrifice. What am I not understanding ?
You're not understanding that you aren't getting anywhere near 6.5% on those loans now. There's been a huge, hidden interest rate haircut
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Post by carol167 on Feb 7, 2020 18:13:19 GMT
Can someone please explain why....
If total earnt interest in my ISA account from May 2017 to Jan 2020 = £4890.58
Why have I had to sacrifice £2771.25 in interest shortfall ? That is more than 50% of all my interest.
That is on top of the £238.16 in 0.5% fees.
I get that if a loan was paying me 6.5% (and not all were) I have to sacrifice the difference between 6.5 and 5.4
That would not amount to over 50% sacrifice. What am I not understanding ?
You're not understanding that you aren't getting anywhere near 6.5% on those loans now. There's been a huge, hidden interest rate haircut
So the email before xmas was even more of a lie then.
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Post by befuddled on Feb 7, 2020 19:01:06 GMT
If you keep the loans until maturity you should get 5.4 % You might have been expecting maybe to get 6.5% for the first 4 years, and 5.4% for the last year - but that's not how LW work it. (assuming y5 started Jan 2020) They re-calculate so you will get 5.4% over the full 5 years. So they have to "haircut" you for what they see as the extra 1.1% you earned over the first 4 years So in my case having £2139 I was penalised (2139 x 1.1%) x 4 years = £94 plus the .5% documented exit fee = £10 (OK that comes to £104, but I have assumed exactly 4 years, or maybe they work out using compound insterest, but it seems near enough to prove the point) ..or leastways that's how I think it's calculated, would be happy to be corrected....  |
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Post by gravitykillz on Feb 7, 2020 19:29:25 GMT
When the going gets tough. Matthew gets going.......
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Post by carol167 on Feb 7, 2020 19:40:36 GMT
If you keep the loans until maturity you should get 5.4 % You might have been expecting maybe to get 6.5% for the first 4 years, and 5.4% for the last year - but that's not how LW work it. (assuming y5 started Jan 2020) They re-calculate so you will get 5.4% over the full 5 years. So they have to "haircut" you for what they see as the extra 1.1% you earned over the first 4 years So in my case having £2139 I was penalised (2139 x 1.1%) x 4 years = £94 plus the .5% documented exit fee = £10 (OK that comes to £104, but I have assumed exactly 4 years, or maybe they work out using compound insterest, but it seems near enough to prove the point) ..or leastways that's how I think it's calculated, would be happy to be corrected....
Are you saying they've based the shortfall on how much you ended up with as capital ?
I started with only a small amount in 2017 and added as time went on ending up with a large amount.
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Post by Matthew on Feb 7, 2020 21:36:25 GMT
When the going gets tough. Matthew gets going....... Hi guys I'm still here. I've kept an eye on recent threads and can understand people's frustration/confusion, though I stand by my previous comments on this subject. The transition from the old Shield model to the new one has obviously been a challenge, however the 'new normal' is significantly more robust over the long term which has to be a good thing. Those looking to exit immediately after the fee-free period are experiencing higher than normal exit costs, but this is a temporary outcome - those exit costs will reduce month on month and those investing over the medium to long term should still be achieving the stated lifetime returns. I do increasingly feel that my participation in these threads is not necessarily helpful/adding value - I'm happy to help clarify anything unclear, but I'm definitely not an extension of, or replacement for, our customer service team who are able to help you with specific or general queries or deal with complaints and will be much more responsive. Thanks
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tyrex
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Post by tyrex on Feb 7, 2020 22:05:21 GMT
When the going gets tough. Matthew gets going....... Hi guys I'm still here. I've kept an eye on recent threads and can understand people's frustration/confusion, though I stand by my previous comments on this subject. The transition from the old Shield model to the new one has obviously been a challenge, however the 'new normal' is significantly more robust over the long term which has to be a good thing. Those looking to exit immediately after the fee-free period are experiencing higher than normal exit costs, but this is a temporary outcome - those exit costs will reduce month on month and those investing over the medium to long term should still be achieving the stated lifetime returns. I do increasingly feel that my participation in these threads is not necessarily helpful/adding value - I'm happy to help clarify anything unclear, but I'm definitely not an extension of, or replacement for, our customer service team who are able to help you with specific or general queries or deal with complaints and will be much more responsive. Thanks Your input is appreciated, I assure you. Indeed, your input was one of the major reasons I invested in the first place, and lack of input over the past few days being a key driver behind my recent decision to request cashing-in my portfolio, as it gave the impression you'd done a runner at the precise moment the going got tough. I have mixed feelings now you've posted, of course. Did I make the right decision to lose a reasonable percentage of my capital (never mind interest)? I'm don't really know now.
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squid
Member of DD Central
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Post by squid on Feb 7, 2020 22:36:55 GMT
Long-standing investors now wanting to withdraw from loans are being charged more in total fees to do so than newer investors. Consequently, it is those early investors - who have already taken the investment risk in the past when the platform was young - are now most affected. It may ultimately be for the Financial Ombudsman Service to decide if the effective retrospective interest rate reduction on interest received many years ago is fair in this case.
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macq
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Post by macq on Feb 7, 2020 22:56:24 GMT
When the going gets tough. Matthew gets going....... Hi guys I'm still here. I've kept an eye on recent threads and can understand people's frustration/confusion, though I stand by my previous comments on this subject. The transition from the old Shield model to the new one has obviously been a challenge, however the 'new normal' is significantly more robust over the long term which has to be a good thing. Those looking to exit immediately after the fee-free period are experiencing higher than normal exit costs, but this is a temporary outcome - those exit costs will reduce month on month and those investing over the medium to long term should still be achieving the stated lifetime returns. I do increasingly feel that my participation in these threads is not necessarily helpful/adding value - I'm happy to help clarify anything unclear, but I'm definitely not an extension of, or replacement for, our customer service team who are able to help you with specific or general queries or deal with complaints and will be much more responsive. Thanks would disagree about your participation as you can obviously answer questions from a higher footing within the company if not the top which might help people stay (maybe you even allow a withdrawal to be cancelled?)which can only be good for your company You say you understand peoples confusion - surely you must agree in that case that something is wrong somewhere if the people who stayed are now the Ones confused? I would guess after your first emails that people while not pleased were understanding of what you were trying to achieve.I would also guess (unless it was just me) that people who stayed while expecting a haircut with the cut to 5.4% assumed it meant on loans already running at 6.5% and that the rate of 5.4% was also going to be the rate on new loans from day One but it would seem neither is correct Would also respectfully suggest that a call to your CS team will only result in being told about the new shield which might be better but no One was told before about H2 and quantum physics to make it the new normal,so having explained now would be a bit annoying for many,as its about how we got to this point from when we first invested with you not whats happening in the future at the moment
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Post by propman on Feb 7, 2020 23:28:50 GMT
Long-standing investors now wanting to withdraw from loans are being charged more in total fees to do so than newer investors. Consequently, it is those early investors - who have already taken the investment risk in the past when the platform was young - are now most affected. It may ultimately be for the Financial Ombudsman Service to decide if the effective retrospective interest rate reduction on interest received many years ago is fair in this case. AIUI, the interest reduction is broadly that required for each year's of loans so that the defaults are paid out. It was the 2017 & 2018 years that had the highest defaults when compared with the Shield contributions made to cover them, so the interest reductions on these are the most severe.
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Post by nutfield on Feb 8, 2020 10:04:46 GMT
I cannot agree that Mathew's comments do not help. It is the febrile atmosphere created when a formerly calming presence was removed at precisely the time when it was most needed which has made the natural caution/paranoia of investors worse. The impression that nobody is left at the tiller creates the conditions that could lead to a "run on the bank". I, and I suspect many others, value and find reassuring, a candid view from inside the company - even if we cant expect a running commentary.
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Post by dan1 on Feb 8, 2020 10:16:16 GMT
This is my understanding of the interest shortfall.
It's comprised of two components. The first is the difference between your loan rate and the rate currently on offer to those taking on your loans. The second is the amount in excess of the new rate of 5.4% required to balance the provision fund over the life of the loan.
Those selling out in December (as I did) only paid the first of these. Those selling out now pay both plus the 0.5% fee. The fact that interest shortfall fees in excess of 7% are being quoted is really a reflection of higher than anticipated default rates for earlier shorts and that may well be more than enough for some to take the hit and exit.
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macq
Member of DD Central
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Post by macq on Feb 8, 2020 10:31:06 GMT
This is my understanding of the interest shortfall. It's comprised of two components. The first is the difference between your loan rate and the rate currently on offer to those taking on your loans. The second is the amount in excess of the new rate of 5.4% required to balance the provision fund over the life of the loan. Those selling out in December (as I did) only paid the first of these. Those selling out now pay both plus the 0.5% fee. The fact that interest shortfall fees in excess of 7% are being quoted is really a reflection of higher than anticipated default rates for earlier shorts and that may well be more than enough for some to take the hit and exit. i think many thought naively,wrongly,confused or just led up the garden path that their old loans had dropped to 5.4% as a haircut or that maybe when selling it would cost a fee of 1.1% to sell to someone else.But there also seems to be the case of not getting 5.4% from day One now and having to pre-fund the provision (and i guess take a cut again if it does not work) But by not answering the questions/fears in a SIMPLE way as per the home page then the right or wrong posts speak for them instead which can't be good for LW
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Ukmikk
Member of DD Central
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Post by Ukmikk on Feb 8, 2020 10:34:49 GMT
When the going gets tough. Matthew gets going....... Hi guys I'm still here. I've kept an eye on recent threads and can understand people's frustration/confusion, though I stand by my previous comments on this subject. The transition from the old Shield model to the new one has obviously been a challenge, however the 'new normal' is significantly more robust over the long term which has to be a good thing. Those looking to exit immediately after the fee-free period are experiencing higher than normal exit costs, but this is a temporary outcome - those exit costs will reduce month on month and those investing over the medium to long term should still be achieving the stated lifetime returns. I do increasingly feel that my participation in these threads is not necessarily helpful/adding value - I'm happy to help clarify anything unclear, but I'm definitely not an extension of, or replacement for, our customer service team who are able to help you with specific or general queries or deal with complaints and will be much more responsive. Thanks I'm sorry Matthew, I'm not buying this. It looks more to me, and it appears I'm not alone, like you've gone running for cover at the first sign of trouble. LW has messed up big time and thrown a lot of confusion into the mix with poor communication. Your own customers are confused, let down and want answers to their questions (and not the scripted BS that comes out of the CS dept). Now was the time for you to grow a pair and start answering those questions, and hopefully mitigate the impact on both your business and your lender community. Your abject failure to do so has reflected badly on LW and made a bad situation worse. What you should have done, and might still want to consider doing if you value your customers' best interests and your company's reputation, is; - Apologise to lenders on behalf of LW (a glaring omission thus far). - Explain clearly and in simple terms what has gone wrong with your lending model and how you are fixing it. - Explain clearly the impact on lenders and what their options are to allow them to make informed decisions going forward. - Continue to engage and respond to questions even if that feels awkward, uncomfortable or tiresome to you. None of this is rocket science, it's basic courtesy and business practice. The FCA requires you to Treat Customers Fairly. Ultimately we all want the situation resolved in the best interests of all parties and return to an even footing without anyone losing out disproportionately. Running for the hills at a critical moment does nothing to help achieve this aim. Time to grow a pair.
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