iano
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Post by iano on Apr 6, 2020 17:00:07 GMT
Agreed, when I first saw it I was expecting a 2% deduction from everything in the portfolio (including capital). We've been through this on the AC threads. They will be taking 2% p.a. of the portfolio (capital) from the interest. Yes but I think it is safe to say it needed clarifying from the original statement.
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Post by jojo on Apr 6, 2020 17:00:37 GMT
It does not read like that ! 'During the Normalisation Period, Lending Works will receive a pro-rated servicing margin of 2.0% p.a. of the outstanding loan portfolio to cover the overheads associated with servicing the portfolio' I'm happy you said that as I thought I was going mad :-) I understood the same as you guys, I thought we would have to pay 2%pa in each total loans portfolio for the next 3 month. The fact that they are using interests to provide the PF and the rest of interest for LW management to pass the crisis seems fair to me, not the best but all markets are in difficult time, as usual, I prefer a company that takes action instead of waiting for the worst.
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Post by df on Apr 6, 2020 17:30:34 GMT
I'm happy you said that as I thought I was going mad :-) I understood the same as you guys, I thought we would have to pay 2%pa in each total loans portfolio for the next 3 month. The fact that they are using interests to provide the PF and the rest of interest for LW management to pass the crisis seems fair to me, not the best but all markets are in difficult time, as usual, I prefer a company that takes action instead of waiting for the worst. I'm happy with this decision. It is fair and reasonable considering the situation we're all in.
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criston
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Post by criston on Apr 6, 2020 17:49:10 GMT
In a nutshell I read it as.
Any capital repayments can be withdrawn.
Interest for the next 90 days, and maybe more, will be diverted to Shield.
2% pa. will be deducted from the loan book to pay for LW expenses.
How can they take the 2% from interest to pay for LW expenses if it has been diverted to Shield.
The Capital is guaranteed for LW to chip away at; the interest is not guaranteed.
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bramhall17
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Post by bramhall17 on Apr 6, 2020 18:48:49 GMT
Personally, whilst in 2019 I systematically got all my P2P investments well below the gross lifetime interest received ( except Lendy) I still have a few thousand quid in LW . To me under the circumstances this policy is sensible. We nor they yet know how this year is going to turn out and if losing some interest gives us a better chance of getting our capital back from a going concern so be it. As we are all to painfully aware now, once a P2P company goes into administration the multiple fees seem to eat away most of our money. This is surely to be avoided if at all possible.
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pip
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Post by pip on Apr 6, 2020 18:53:39 GMT
I wish Lending Works well, always seemed to be one of the good guys and fair play for being so transparent.
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Post by df on Apr 6, 2020 19:03:00 GMT
How can they take the 2% from interest to pay for LW expenses if it has been diverted to Shield. I guess 2% goes to operational costs and the rest of interest to shield.
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oxdoc
Posts: 19
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Post by oxdoc on Apr 6, 2020 19:16:25 GMT
Could someone please clarify whether the 2% servicing margin is taken from loans and then excess interest is diverted to the shield (lender return=0%) or excess interest is diverted to the shield and then the 2% servicing margin is taken (lender return=-2%)?
Could someone from LW please elaborate on why this is? Do you really mean that income from existing borrowers has dropped to nearly zero? I'd understand that for arrangement fees for new loans but not for repayments of loan interest. If borrowers were representative of the general population, most would still be employed and able to pay back their loans. Have LW's borrowers been affected particularly badly by the effects of the virus? If so, was it anticipated that they would be so vulnerable in a recession? What fraction of borrowers are actually not currently meeting their loan repayments? I find it a bit troubling that there is not enough income from loan repayments to even cover LW's costs without having to take funds from lenders (edit - if indeed that is the case, depending on the answer to my question above). This seems to be a considerably worse situation than at AC (which I happen to know about from being invested there - they don't seem to think they need to let lenders' returns become negative for now).
I'm not very impressed by this. I think a fair outcome is that people with an ownership stake take a hit that's proportional to what lenders are taking. If lender returns are going to zero or becoming negative, then founder and director remuneration should also be going to zero in my view (or maybe to a level to allow subsistence if they are somehow not yet rich). AC reduced salaries by 50% - I don't feel people lower down the chain should be hit especially hard, but those at director level can't take generous payouts when times are good and then leave it to lenders to bail out the company when they're not.
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jlend
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Post by jlend on Apr 6, 2020 19:48:23 GMT
Could someone please clarify whether the 2% servicing margin is taken from loans and then excess interest is diverted to the shield (lender return=0%) or excess interest is diverted to the shield and then the 2% servicing margin is taken (lender return=-2%)? Could someone from LW please elaborate on why this is? Do you really mean that income from existing borrowers has dropped to nearly zero? I'd understand that for arrangement fees for new loans but not for repayments of loan interest. If borrowers were representative of the general population, most would still be employed and able to pay back their loans. Have LW's borrowers been affected particularly badly by the effects of the virus? If so, was it anticipated that they would be so vulnerable in a recession? What fraction of borrowers are actually not currently meeting their loan repayments? I find it a bit troubling that there is not enough income from loan repayments to even cover LW's costs without having to take funds from lenders (edit - if indeed that is the case, depending on the answer to my question above). This seems to be a considerably worse situation than at AC (which I happen to know about from being invested there - they don't seem to think they need to let lenders' returns become negative for now). I'm not very impressed by this. I think a fair outcome is that people with an ownership stake take a hit that's proportional to what lenders are taking. If lender returns are going to zero or becoming negative, then founder and director remuneration should also be going to zero in my view (or maybe to a level to allow subsistence if they are somehow not yet rich). AC reduced salaries by 50% - I don't feel people lower down the chain should be hit especially hard, but those at director level can't take generous payouts when times are good and then leave it to lenders to bail out the company when they're not. Remember that when LW switched to variable interest rates they very kindly agreed to divert the vast majority of their interest rate margin to the shield to limit the impact on lenders. This was very generous. Now they have stopped writing new loans they have very little income as they say. The 2% seems totally fair and very reasonable under the circumstances. Of course many existing borrowers are still paying interest some of this (2%) is covering some of LW costs, the rest is going into the shield. Sounds reasonable.
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Post by jojo on Apr 6, 2020 20:26:43 GMT
I am one of the people on the queue waiting to draw part of my investment since mid March.
I also have my capital repayments and interests set to be withdraw every 28th of the Month from the last 3 months and everything has been working fine even in March.
I do have 3 questions :
1 - If i understand LW updates, all repayment will be available to draw (because they can't be invested) , would the capital repayments be automatically transfer into bank account like when you setup your investment preference to draw repayment monthly, if yes, is the 28th of each month be the day or will it be on a weekly basis?
2 - I do have a question on whether LW will create a cancelation option for people who have asked to withdraw and now which to cancel part or total the amount? (because they don"t want to pay interest shortfall fees they had or because they don't need the money now and wish to wait later to draw) , I have just seen that Ratesetter have announced 5.3M has been cancelled over the last 2 weeks, it could help LW restarts back to normal early ?
3- Also, because I had to pay interest shortfall fees and still I have not been able to access the money, if there is no possibility to cancel part or all of the withdraw amount, would the shortfall interest fees be the same or can they be higher or lower in 90 days time ? because they were calculated on the loan lifetime interest rate - current interest rate at the time of the withdraw request.
Thanks for anyone in the forum or Matthew from LW if we could have some answers.
Much appreciated the transparent approach from LW, i think and i share most investors view that this measure are for the best to protect investor capital.
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oxdoc
Posts: 19
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Post by oxdoc on Apr 6, 2020 21:13:42 GMT
Remember that when LW switched to variable interest rates they very kindly agreed to divert the vast majority of their interest rate margin to the shield to limit the impact on lenders. This was very generous. Arguably it was LW's incompetence at overestimating net returns and then waiting until the last minute to do anything about the dwindling shield balance that led to them having to take that step, and lenders still took a big hit with their net interest falling to close to zero, so I don't think they have behaved especially generously. That is on top of them sending out an email in December that seems to have been misleading to most people regarding lender returns being cut (see other threads). Perhaps diverting interest to the shield would explain why their profit has gone to zero given no new loans being arranged, but it still wouldn't explain why revenue has fallen to near zero (unless payments from borrowers into the shield are not counted as revenue for some reason).
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Post by jon3001 on Apr 7, 2020 7:47:29 GMT
Can there ever be a run on a P2P platform?
www.lendingworks.co.uk/blog/peer-to-peer/can-there-ever-be-run-p2p-platformWhen you read blog articles such as these there did seem to be an air of complacency regarding a run on a P2P platform. Lenders would have to accept the illiquid nature of the investments and hold them to maturity while the platform itself would just continue materially unaffected. Clearly that's not the case. T&Cs retrospectively changed. New charges being introduced to keep things afloat as the platform's business model has broken down. I guess this is better than the alternatives so hopefully it's going to work out...
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Ukmikk
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Post by Ukmikk on Apr 7, 2020 11:21:31 GMT
Remember that when LW switched to variable interest rates they very kindly agreed to divert the vast majority of their interest rate margin to the shield to limit the impact on lenders. This was very generous. Arguably it was LW's incompetence at overestimating net returns and then waiting until the last minute to do anything about the dwindling shield balance that led to them having to take that step, and lenders still took a big hit with their net interest falling to close to zero, so I don't think they have behaved especially generously. That is on top of them sending out an email in December that seems to have been misleading to most people regarding lender returns being cut (see other threads). Perhaps diverting interest to the shield would explain why their profit has gone to zero given no new loans being arranged, but it still wouldn't explain why revenue has fallen to near zero (unless payments from borrowers into the shield are not counted as revenue for some reason). Agree with you. They have been shown to be both incompetent and arguably untrustworthy, and nothing I am seeing in their current handling is changing that view IMO.
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Post by EJi on Apr 8, 2020 20:46:46 GMT
I am one of the people on the queue waiting to draw part of my investment since mid March. I also have my capital repayments and interests set to be withdraw every 28th of the Month from the last 3 months and everything has been working fine even in March. I do have 3 questions : 1 - If i understand LW updates, all repayment will be available to draw (because they can't be invested) , would the capital repayments be automatically transfer into bank account like when you setup your investment preference to draw repayment monthly, if yes, is the 28th of each month be the day or will it be on a weekly basis? 2 - I do have a question on whether LW will create a cancelation option for people who have asked to withdraw and now which to cancel part or total the amount? (because they don"t want to pay interest shortfall fees they had or because they don't need the money now and wish to wait later to draw) , I have just seen that Ratesetter have announced 5.3M has been cancelled over the last 2 weeks, it could help LW restarts back to normal early ? 3- Also, because I had to pay interest shortfall fees and still I have not been able to access the money, if there is no possibility to cancel part or all of the withdraw amount, would the shortfall interest fees be the same or can they be higher or lower in 90 days time ? because they were calculated on the loan lifetime interest rate - current interest rate at the time of the withdraw request. Thanks for anyone in the forum or Matthew from LW if we could have some answers. Much appreciated the transparent approach from LW, i think and i share most investors view that this measure are for the best to protect investor capital. Could you answer any of these questions please?
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Post by disting on Apr 9, 2020 18:30:39 GMT
Trying to buy a house, so, I tried to withdraw my money from lendingworks early in March..... Delay. ..Now a 3 month ‘freeze’.
At the same time , I tried to do the same with my Ratesetter account..... Delay... then I received an email recently saying my funds were there for withdrawal , followed in short order by an email saying Ratesetter had ‘sold part of their bad loan book’ (or some such) and had also bolstered their ‘shield’ with those funds and all back to normal. I presume that’s why I got my money also- too much of a coincidence .
Why can’t LendingWorks do the same thing?? And pay out those wishing to withdraw ??
Vast majority of my loans in excess of 6% surely they would be saleable at current market interest rates??
Sounds dodgy if they are not looking at doing the same ..
(FWIW ,like others , I also think the ‘Directors should be taking zero pay , (not 80%) until the company is running as it should. In effect they are Taking from investors who cannot even access even 1% of their own money. No doubt the directors will make lots when the sun shines , or when the company is sold, but the sun ain’t shining!,)
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