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Post by befuddled on Feb 11, 2020 4:16:43 GMT
If investors are liable for shortfalls on individual loans how can they do due diligence on the investment ?
In other words this is gambling, not investing, if 2 investors invested on the same day. One's loan went bad the other didn't they get different outcomes....
Simply by luck....
If everyone took equal haircut it would be fair, but that seems not to be the case
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squid
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Post by squid on Feb 11, 2020 8:21:48 GMT
Absolutely.
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macq
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Post by macq on Feb 11, 2020 8:35:30 GMT
If investors are liable for shortfalls on individual loans how can they do due diligence on the investment ? In other words this is gambling, not investing, if 2 investors invested on the same day. One's loan went bad the other didn't they get different outcomes.... Simply by luck.... If everyone took equal haircut it would be fair, but that seems not to be the case I have always been ready for a haircut in p2p but did not ever consider the trust issue when starting out.At the end of the day there was no One off pooling/haircut because that would have probably stopped the business if the rate had dropped over night from 6.5% to say 3% going forward to top up the provision fund on all the loans going forward (old and new) it would have been more fair - but we can guess that as a head line rate it would not have attracted much new money.This would mean if you were lucky and could sell a loan due to lack of new money being attracted you at least knew what the rate would be because both rates were the same but LW would possibly be in run off at this point Instead to keep a nice healthy looking % rate on the home page to attract new investors they made the current change which has basically re-set the product from scratch and hopefully cleared the shortfall but penalising old customers while still hoping to gain new. In a poorly worded email people were led to believe that they were taking a cut of 1.1% on old loans so hence most thought this was A.the new rate from that point and B.the new selling price neither of which turned out to be true. It could well be true that it was better for investors to have the method changed (and of course the business) and that after a couple of years its all worked out. But those new customers attracted by the still attractive rates which was the main aim have to trust that LW who seem to suggest in their latest blog that the provision fund method is infallible and i guess they said that when they launched version One (which it probably is if you can take money in advance or claw back apparently) If not they will also face changes which hopefully are better explained next time. A one off event would not have been nice but at least everybody would know where they were but the current method involves a formula that only LW understand - which is where the trust will come in for most people
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Post by carol167 on Feb 11, 2020 9:08:12 GMT
LW can post whatever % rate they like on the homepage. But as has been proven - there is little chance of them honouring it. It's a pie in the sky figure.
When all is said and done - you'll end up with whatever they feel like giving you regardless of how much you've had or for how long you'e been investing with them. That makes it a pot luck investment now.
Trust has gone that everyone would be treated fairly when problems arise.
Instead of bringing us along with them with the changes they have alienated the very people they rely on for their business model.
I have no doubt it will happen again down the line with the new batch of suckers naive investors who are pulled in by the prospect of unattainable headline rates.
RS & AC got it right and seem to be prospering.
LW got it very wrong.
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Post by dan1 on Feb 11, 2020 9:23:03 GMT
It can't be easy posting in such a hostile environment, and in that you have my respect Matthew. I wasn't much fussed by the contents mind you but then I'm not sure what you could say at this stage given prior events. It certainly won't alter my decision on whether to invest, or not. A couple (or three  ) of specific comments: 1. the worked example, although welcome, is weak because it doesn't account for the 3 or 5 year loan terms (or represent the actual reductions seen by several lenders) 2. you went a little too heavy on "advise", which I believe has backfired. This isn't about advise, it's about information. 3. I can't get this out of my head.... I searched the LW board for "arb" and "arbitrage" - your post is the only occurrence. In hindsight, everyone invested in LW should have sold out (or attempted to sell out) in December. Those unhappy with the interest shortfall and credit risk would of remained out, those accepting the risks would have gained through this arbitrage. This alone was the reason for the obfuscation. |
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Post by carol167 on Feb 11, 2020 9:31:50 GMT
It can't be easy posting in such a hostile environment, and in that you have my respect Matthew . I wasn't much fussed by the contents mind you but then I'm not sure what you could say at this stage given prior events. It certainly won't alter my decision on whether to invest, or not. A couple (or three ) of specific comments: 1. the worked example, although welcome, is weak because it doesn't account for the 3 or 5 year loan terms (or represent the actual reductions seen by several lenders) 2. you went a little too heavy on "advise", which I believe has backfired. This isn't about advise, it's about information. 3. I can't get this out of my head.... I searched the LW board for "arb" and "arbitrage" - your post is the only occurrence. In hindsight, everyone invested in LW should have sold out (or attempted to sell out) in December. Those unhappy with the interest shortfall and credit risk would of remained out, those accepting the risks would have gained through this arbitrage. This alone was the reason for the obfuscation. Your last point makes it clear that THEY therefore knew how bad it would be for existing investors going forward. Clearly WE did not. Since pretty much all of us thought it was going to be 5.4 going forward - I would think the thought of what Matthew is suggesting would never have crossed our minds. HOw could it ? We didn't have the facts.
A slight adjustment to the rate (which we'd been arguing for months should have happened sooner) - seemed perfectly reasonable. There was no mention of punitive sell out fees should we not have got out at December.
For LW to suggest that we would have got out at December to in some way game the system with the intention of returning as new investors - is quite frankly downright insulting!!
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r00lish67
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Post by r00lish67 on Feb 11, 2020 9:35:58 GMT
A slight adjustment to the rate (which we'd been arguing for months should have happened sooner) - seemed perfectly reasonable. There was no mention of punitive sell out fees should we not have got out at December.
For LW to suggest that we would have got out at December to in some way game the system with the intention of returning as new investors - is quite frankly insulting!!
Are people complaining to the FOS on this basis? If they agree it was unfair, I would imagine LW would be obliged to reimburse/waive any unfair sellout fees. Of course, double-edged sword as that might hobble the platform/liquidity entirely.
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squid
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Post by squid on Feb 11, 2020 10:11:26 GMT
I certainly will be (if this situation is unresolved by LW). The process requires complaints to be made to LW first, which can be transferred to the FOS if rejected or after 8 weeks - whichever comes first. I have received some criticism for my stance on this matter, however investors have the full right to make complaints, and are able to make use of all available evidence.
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macq
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Post by macq on Feb 11, 2020 10:13:24 GMT
It can't be easy posting in such a hostile environment, and in that you have my respect Matthew . I wasn't much fussed by the contents mind you but then I'm not sure what you could say at this stage given prior events. It certainly won't alter my decision on whether to invest, or not. A couple (or three ) of specific comments: 1. the worked example, although welcome, is weak because it doesn't account for the 3 or 5 year loan terms (or represent the actual reductions seen by several lenders) 2. you went a little too heavy on "advise", which I believe has backfired. This isn't about advise, it's about information. 3. I can't get this out of my head.... I searched the LW board for "arb" and "arbitrage" - your post is the only occurrence. In hindsight, everyone invested in LW should have sold out (or attempted to sell out) in December. Those unhappy with the interest shortfall and credit risk would of remained out, those accepting the risks would have gained through this arbitrage. This alone was the reason for the obfuscation. Could not agree more with point 2. as it is a cop out to say we can not give advice as you mention it should be about information and clear info at that. With regards your point 3 agree i don't think many were thinking of lets try to benefit from rate arbitrage when being told there are problems with the product as its not exactly the first thing on your mind and it could be argued the biggest benefactors of rate arbitrage are LW with a rescued provision fund
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Post by carol167 on Feb 11, 2020 10:28:47 GMT
I certainly will be. The process requires complaints to be made to LW first, which can be transferred to the FOS if rejected or after 8 weeks - whichever comes first. I have received some criticism for my stance on this matter, however investors have the full right to make complaints, and are able to make use of all available evidence.
Ditto.
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Ukmikk
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Post by Ukmikk on Feb 12, 2020 19:23:41 GMT
Quote from a recent 4th way piece about GS;
"It's always reassuring to us at 4thWay when a P2P lending website has the confidence to admit its biggest mistakes, which RateSetter did very publicly in its announcements and communications with lenders and the press.
Not only is it about trust and a sign of self-confidence, but it shows that the platform is self-reflective enough not to pass the buck. This doesn't go without saying. Not at all. Many peer-to-peer lending websites don't have the courage to face up to and own up to their mistakes."
Can anyone name one?
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Ukmikk
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Post by Ukmikk on Feb 12, 2020 19:36:48 GMT
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Post by Ace on Feb 12, 2020 21:45:04 GMT
Quote from a recent 4th way piece about GS; "It's always reassuring to us at 4thWay when a P2P lending website has the confidence to admit its biggest mistakes, which RateSetter did very publicly in its announcements and communications with lenders and the press. Not only is it about trust and a sign of self-confidence, but it shows that the platform is self-reflective enough not to pass the buck. This doesn't go without saying. Not at all. Many peer-to-peer lending websites don't have the courage to face up to and own up to their mistakes." Can anyone name one? I'd call ABLrate out as a platform that are fairly honest when things go wrong, and they certainly put considerable effort, time and money in to trying to find solutions.
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Post by gravitykillz on Feb 23, 2020 19:02:14 GMT
All quiet now on the lw board. Anything changed with the platform over the last 2 weeks ? Any improvements?
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Post by Deleted on Feb 23, 2020 21:21:20 GMT
I'll be shot down in flames, but strikes me that some investors panicked and got out too quickly. Not handled well at all by LW but in the medium/long term this will strengthen the platform, aiding returns of those who stayed put.
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