r00lish67
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Post by r00lish67 on May 15, 2020 17:41:11 GMT
Shouldn't be - RS still categorically state here"What happens if a borrower misses a payment?" "Sometimes even a creditworthy borrower can miss a payment. That is why we have the Provision Fund to automatically reimburse investors. This means that you keep receiving your repayments, when you are expecting them"
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wuzimu
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Post by wuzimu on May 15, 2020 18:15:07 GMT
I want to love RS... they have been my favorite P2P for long time for being straight up. Adpod etc.
I got to point out the bol**x when I see it creeping in tho.....
So another Friday afternoon thought:
You see this disclaimer all over RS website recently:
"The Provision Fund we offer does not give you a right to a payment so you may not receive a pay-out even if you suffer loss. The Fund has absolute discretion as to the amount that may be paid, including making no payment at all. Therefore, investors should not rely on possible pay-outs from the Provision Fund when considering whether or how much to invest."
Compare that to the PF Policy document:
"Is there any discretion over payments made by the Provision Fund to investors?
There is no discretion in terms of pay out –RTS will pay out to RateSetter investors provided that there are sufficient funds in the Provision Fund to do so..."
Contradictory muddleness..... my understanding is that PF must continue to function even if it means capital haircuts, because if it doesn't there will be different loss outcomes across lenders depending on the loans RS put them into. That flies in the face of the auto-diversification feature of RS products which is solely achieved through the PF.
Seems like RS have a bit of thinking to do, I'm sure they're doing it.... I want to say.... PLEASE RS, be straight up even with the bad news, don't sneek little wiggles into the operation of PF, thats a Lendy trick and will alienate your good lenders.
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one21
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Post by one21 on May 15, 2020 18:30:28 GMT
I want to love RS... they have been my favorite P2P for long time for being straight up. Adpod etc.
I got to point out the bol**x when I see it creeping in tho.....
So another Friday afternoon thought:
You see this disclaimer all over RS recently:
"The Provision Fund we offer does not give you a right to a payment so you may not receive a pay-out even if you suffer loss. The Fund has absolute discretion as to the amount that may be paid, including making no payment at all. Therefore, investors should not rely on possible pay-outs from the Provision Fund when considering whether or how much to invest."
Compare that to the PF Policy document:
"Is there any discretion over payments made by the Provision Fund to investors?
There is no discretion in terms of pay out –RTS will pay out to RateSetter investors provided that there are sufficient funds in the Provision Fund to do so..."
Contradictory muddleness..... my understanding is that PF must continue to function even if it means capital haircuts, because if it doesn't there will be different loss outcomes across lenders depending on the loans RS put them into. That flies in the face of the auto-diversification feature of RS products which is solely achieved through the PF.
Seems like RS have a bit of thinking to do, I'm sure they're doing it.... I want to say.... PLEASE RS, be straight up even with the bad news, don't sneek little wiggles into the operation of PF, thats a Lendy trick andwill alienate your good lenders.
Spot on "auto-diversification" this has been at the forefront of my concerns for a number weeks! One of my 'Access' part loans amounts to a significant proportion of my entire portfolio! Edit: At least the surplus from the recent interest rate cut is being used to replenish the provision fund as I understand it.
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jlend
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Post by jlend on May 15, 2020 19:01:30 GMT
I want to love RS... they have been my favorite P2P for long time for being straight up. Adpod etc.
I got to point out the bol**x when I see it creeping in tho.....
So another Friday afternoon thought:
You see this disclaimer all over RS website recently:
"The Provision Fund we offer does not give you a right to a payment so you may not receive a pay-out even if you suffer loss. The Fund has absolute discretion as to the amount that may be paid, including making no payment at all. Therefore, investors should not rely on possible pay-outs from the Provision Fund when considering whether or how much to invest."
Compare that to the PF Policy document:
"Is there any discretion over payments made by the Provision Fund to investors?
There is no discretion in terms of pay out –RTS will pay out to RateSetter investors provided that there are sufficient funds in the Provision Fund to do so..."
Contradictory muddleness..... my understanding is that PF must continue to function even if it means capital haircuts, because if it doesn't there will be different loss outcomes across lenders depending on the loans RS put them into. That flies in the face of the auto-diversification feature of RS products which is solely achieved through the PF.
Seems like RS have a bit of thinking to do, I'm sure they're doing it.... I want to say.... PLEASE RS, be straight up even with the bad news, don't sneek little wiggles into the operation of PF, thats a Lendy trick and will alienate your good lenders.
The absolute discretion including no payment at all was an FCA change that all the PF protected platforms had to add last year by the same deadline. Growth Street, Assetz, Lending Works etc.
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Post by gfk on May 15, 2020 21:13:51 GMT
sigh of relief today after I managed to withdraw £19k when one of my non-atomised loans expired ... question is, why would I have 19k in a single loan in the first place?
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Post by Deleted on May 15, 2020 21:25:40 GMT
sigh of relief today after I managed to withdraw £19k when one of my non-atomised loans expired ... question is, why would I have 19k in a single loan in the first place? Because diversification is achieved through the provision fund in RateSetter.
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Post by Badly Drawn Stickman on May 15, 2020 21:37:09 GMT
sigh of relief today after I managed to withdraw £19k when one of my non-atomised loans expired ... question is, why would I have 19k in a single loan in the first place? Because diversification is achieved through the provision fund in RateSetter. True, unequivocally. Having said that, presumably the 19k was put on the market in one lump, why would anybody expect any other result than it mostly going to a limited number of loans?
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one21
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Post by one21 on May 16, 2020 6:01:05 GMT
I wouldn't want to be accused of scaremongering, but wouldn't it be safer for defaulted loans to be held back with the RYI process (or even a worked percentage) until the PF is replenished to a healthier state. Otherwise there's a danger that those at the end of the queue may suffer losses disproportionately.
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Post by scepticalinvestor on May 16, 2020 6:56:45 GMT
I see your point but not sure I entirely agree. Either through luck or foresight, if you were quicker than others to recognise the escalating risk and put in an RYI early, I think it's only fair that you get paid out first. I wouldn't want to be accused of scaremongering, but wouldn't it be safer for defaulted loans to be held back with the RYI process (or even a worked percentage) until the PF is replenished to a healthier state. Otherwise there's a danger that those at the end of the queue may suffer losses disproportionately.
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one21
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Post by one21 on May 16, 2020 7:39:50 GMT
I see your point but not sure I entirely agree. Either through luck or foresight, if you were quicker than others to recognise the escalating risk and put in an RYI early, I think it's only fair that you get paid out first. I wouldn't want to be accused of scaremongering, but wouldn't it be safer for defaulted loans to be held back with the RYI process (or even a worked percentage) until the PF is replenished to a healthier state. Otherwise there's a danger that those at the end of the queue may suffer losses disproportionately. Yes but not necessarily defaulted loans, they could be paid at a later date. Healthy PF = fewer RYIs (imho)
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chris1200
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Post by chris1200 on May 16, 2020 9:19:20 GMT
I see your point but not sure I entirely agree. Either through luck or foresight, if you were quicker than others to recognise the escalating risk and put in an RYI early, I think it's only fair that you get paid out first. Yes but not necessarily defaulted loans, they could be paid at a later date. Healthy PF = fewer RYIs (imho) Not allowing RYI for defaulted loans until some (unspecified) later date would be a material change to RateSetter's terms. Regardless of what you or others think of it now, it's the system we all signed up to.
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r00lish67
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Post by r00lish67 on May 16, 2020 9:31:26 GMT
Yes but not necessarily defaulted loans, they could be paid at a later date. Healthy PF = fewer RYIs (imho) Not allowing RYI for defaulted loans until some (unspecified) later date would be a material change to RateSetter's terms. Regardless of what you or others think of it now, it's the system we all signed up to. Against the terms, but I think even more importantly it would be truly massively unfair, as it would go against the fundamental principle of automatic diversification. It shouldn't matter if you have one big RS contract or a hundred little ones. Doing that would randomly penalise those who just happened to be assigned large allocations of single loans, through no choice of their own. (No financial interest btw, I'm out).
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chris1200
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Post by chris1200 on May 16, 2020 11:15:45 GMT
Not allowing RYI for defaulted loans until some (unspecified) later date would be a material change to RateSetter's terms. Regardless of what you or others think of it now, it's the system we all signed up to. Against the terms, but I think even more importantly it would be truly massively unfair, as it would go against the fundamental principle of automatic diversification. It shouldn't matter if you have one big RS contract or a hundred little ones. Doing that would randomly penalise those who just happened to be assigned large allocations of single loans, through no choice of their own. (No financial interest btw, I'm out). Oh, quite. I just wanted to emphasise that we don't even need to go to the fair/unfair debate given it just can't happen (unless RS breaches its terms).
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one21
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Post by one21 on May 16, 2020 11:19:45 GMT
Not allowing RYI for defaulted loans until some (unspecified) later date would be a material change to RateSetter's terms. Regardless of what you or others think of it now, it's the system we all signed up to. Against the terms, but I think even more importantly it would be truly massively unfair, as it would go against the fundamental principle of automatic diversification. It shouldn't matter if you have one big RS contract or a hundred little ones. Doing that would randomly penalise those who just happened to be assigned large allocations of single loans, through no choice of their own. (No financial interest btw, I'm out). Well I have a significant large loan as part of my 'Access' portfolio and would be willing to accept say 75% then 25% at later date when things pick up again (if it was in default that is). The most important consideration imho is for the platform not to go into administration. Obviously it would have to go to a vote! Unless anyone else has a better solution?
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chris1200
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Post by chris1200 on May 16, 2020 12:24:55 GMT
Against the terms, but I think even more importantly it would be truly massively unfair, as it would go against the fundamental principle of automatic diversification. It shouldn't matter if you have one big RS contract or a hundred little ones. Doing that would randomly penalise those who just happened to be assigned large allocations of single loans, through no choice of their own. (No financial interest btw, I'm out). Well I have a significant large loan as part of my 'Access' portfolio and would be willing to accept say 75% then 25% at later date when things pick up again (if it was in default that is). The most important consideration imho is for the platform not to go into administration. Obviously it would have to go to a vote! Unless anyone else has a better solution? A vote wouldn't be feasible - RS would need the consent of every single investor, not just a majority. (Clearly other platforms appear happier to make such changes to their terms without consent at the moment - we'll see how that goes in the longer term...)
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