alanh
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Post by alanh on Apr 11, 2020 15:20:34 GMT
Just to clarify......when you refer to "angry investors" are you talking about the ones who are currently having their cash misappropriated from them to fund the small investor bailout? Curious as to why you think AC are arranging a "small investor bailout". Not the mechanics behind it, but the motives. It is a very good question iRobot. They have made a conscious decision to do this, presumably they gave it some thought. They must have realised that by changing from proportional to flat rate it was going to seriously affect the larger lenders and yet they decided to go ahead with it anyway. Why? I don't think it is a decision that the management of any business would have made if they thought that the business had a long term future. What would be the point of alienating a large chunk of your investor base? - its very unlikely any of them will ever come back. AND YET - they made this decision. Look at other platforms - all are struggling one way or another but none of them have changed their terms of business as regards how the investor payouts work. Consequently, no other platforms are suffering from the internal fighting going on here. One clear effect of this decision (also mentioned elsewhere on this forum) is that by paying off all the small investors first it is reducing the number of complaints/legal actions against them in the future. It is also probably the case that some of the bigger lenders have exceeded FCA guidelines so will have less of a case against AC for future losses. Is this why they have done it? Some kind of a**e covering exercise?
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iRobot
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Post by iRobot on Apr 11, 2020 18:14:16 GMT
I would add that those trying to support AC at this time would do well not to engage in personal debates. It only serves to fuel negative discussions and thereby degrade the reputation of AC. By all means correct factual errors but don't try and question their motives, quote their previous posts or any of that stuff, it only does harm to AC. Why do I say this? Put yourselves in the shoes of a new or existing investor who stumbles across this forum, would you consider investing or add further funds when you read page after page of bad tempered debate?Sorry dan1 , I disagree. Put yourself in the shoes of that new / existing investor; what would you think if all you were to read were the coordinated efforts of three posters repeatedly denigrating AC, and an absence of posts responding to offer a contradictory point of view? So long as the responses are calmly stated and as impersonal as possible, in my opinion, not responding would do more harm than good. Also, the discussion highlights some worthwhile lessons re: risk awareness, over exposure, mistaking P2P as a pseudo savings account, the absolute nature of a platform's role in the P2P investment, and so on. I'll acknowledge the repetitiveness can make it harder to distinguish the message from the noise, but without that discussion, all that would be left is an echo-chamber for the malcontents.
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Post by Harland Kearney on Apr 11, 2020 18:17:03 GMT
I would add that those trying to support AC at this time would do well not to engage in personal debates. It only serves to fuel negative discussions and thereby degrade the reputation of AC. By all means correct factual errors but don't try and question their motives, quote their previous posts or any of that stuff, it only does harm to AC. Why do I say this? Put yourselves in the shoes of a new or existing investor who stumbles across this forum, would you consider investing or add further funds when you read page after page of bad tempered debate?Sorry dan1 , I disagree. Put yourself in the shoes of that new / existing investor; what would you think if all you were to read were the coordinated efforts of three posters repeatedly denigrating AC, and an absence of posts responding to offer a contradictory point of view? So long as the responses are calmly stated and as impersonal as possible, in my opinion, not responding would do more harm than good. Also, the discussion highlights some worthwhile lessons re: risk awareness, over exposure, mistaking P2P as a pseudo savings account, the absolute nature of a platform's role in the P2P investment, and so on. I'll acknowledge the repetitiveness can make it harder to distinguish the message from the noise, but without that discussion, all that would be left is an echo-chamber for the malcontents. Could not agree more, would be best if the staff team would actually take action against spam polls and statements which could be seen as entirely false/sweeping. (Loads of examples past 30 days) Not naming anybody particularly. Often when false information is corrected all is well. However in this case, false information corrected is countered by more crying & conspiriacy. Aimed at both platform and *shill* alike. 
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iRobot
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Post by iRobot on Apr 11, 2020 18:24:37 GMT
Curious as to why you think AC are arranging a "small investor bailout". Not the mechanics behind it, but the motives. It is a very good question iRobot. They have made a conscious decision to do this, presumably they gave it some thought. They must have realised that by changing from proportional to flat rate it was going to seriously affect the larger lenders and yet they decided to go ahead with it anyway. Why? I don't think it is a decision that the management of any business would have made if they thought that the business had a long term future. What would be the point of alienating a large chunk of your investor base? - its very unlikely any of them will ever come back. AND YET - they made this decision. Look at other platforms - all are struggling one way or another but none of them have changed their terms of business as regards how the investor payouts work. Consequently, no other platforms are suffering from the internal fighting going on here. One clear effect of this decision (also mentioned elsewhere on this forum) is that by paying off all the small investors first it is reducing the number of complaints/legal actions against them in the future. It is also probably the case that some of the bigger lenders have exceeded FCA guidelines so will have less of a case against AC for future losses. Is this why they have done it? Some kind of a**e covering exercise? - I think you over-estimate the number of investors (by headcount and by £'s invested) that are unhappy with ACs decisions given the circumstances. I also think that when the situation returns back to a semblance of how things were pre-March, an high number of those withdrawing funds AC now, will return. Maybe with lower sums, but that's not necessarily a bad thing. AC may have to adapt to having a less care-free lender base, but that's not insurmountable. This - Some have simply stopped making interest payments altogether. Which would you prefer? AC making some payments to everyone, or no payments to anyone? This - I'm pretty sure AC will be certain of their legal footing on the decisions made and the changes implemented. Bear in mind, they not only have to balance the risk of legal action from lenders (over whom AC will believe they have control via the T&Cs signed up to by lenders) but also the legal risk from borrowers who are also in a a contractual agreement with AC and one in which the borrower possibly (probably?) has a stronger footing. This - I doubt AC see it as their problem. The risk warnings are abundant and the Appropriateness Test every existing and new lender has undertaken since Nov 2019 is a handy way of putting the responsibility back on the lender. Big or small, if you've invested inappropriately, AC aren't going to be in the hot seat over it.
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Post by dan1 on Apr 11, 2020 18:26:28 GMT
I would add that those trying to support AC at this time would do well not to engage in personal debates. It only serves to fuel negative discussions and thereby degrade the reputation of AC. By all means correct factual errors but don't try and question their motives, quote their previous posts or any of that stuff, it only does harm to AC. Why do I say this? Put yourselves in the shoes of a new or existing investor who stumbles across this forum, would you consider investing or add further funds when you read page after page of bad tempered debate?Sorry dan1 , I disagree. Put yourself in the shoes of that new / existing investor; what would you think if all you were to read were the coordinated efforts of three posters repeatedly denigrating AC, and an absence of posts responding to offer a contradictory point of view? So long as the responses are calmly stated and as impersonal as possible, in my opinion, not responding would do more harm than good. Also, the discussion highlights some worthwhile lessons re: risk awareness, over exposure, mistaking P2P as a pseudo savings account, the absolute nature of a platform's role in the P2P investment, and so on. I'll acknowledge the repetitiveness can make it harder to distinguish the message from the noise, but without that discussion, all that would be left is an echo-chamber for the malcontents. No worries, we all have different opinions - just look at the AC board  I'm not talking about folk who have the time to research platforms in depth (i.e. us lot of loons ) but those doing a quick sanity check or those who stumble on this site from searching for something unrelated (IFISA rules or whatever). If they're hit with the sort of debate we see here then they don't look further. I know this because I've been there myself... I won't mention platforms because it's unfair to AC. I take your point about impersonal etc and I do agree but it always degenerates as frustration boils over. I guess that either way the damage is done.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 11, 2020 18:46:29 GMT
It is a very good question iRobot. They have made a conscious decision to do this, presumably they gave it some thought. They must have realised that by changing from proportional to flat rate it was going to seriously affect the larger lenders and yet they decided to go ahead with it anyway. Why? I don't think it is a decision that the management of any business would have made if they thought that the business had a long term future. What would be the point of alienating a large chunk of your investor base? - its very unlikely any of them will ever come back. AND YET - they made this decision. Look at other platforms - all are struggling one way or another but none of them have changed their terms of business as regards how the investor payouts work. Consequently, no other platforms are suffering from the internal fighting going on here. One clear effect of this decision (also mentioned elsewhere on this forum) is that by paying off all the small investors first it is reducing the number of complaints/legal actions against them in the future. It is also probably the case that some of the bigger lenders have exceeded FCA guidelines so will have less of a case against AC for future losses. Is this why they have done it? Some kind of a**e covering exercise? - I think you over-estimate the number of investors (by headcount and by £'s invested) that are unhappy with ACs decisions given the circumstances. I also think that when the situation returns back to a semblance of how things were pre-March, an high number of those withdrawing funds AC now, will return. Maybe with lower sums, but that's not necessarily a bad thing. AC may have to adapt to having a less care-free lender base, but that's not insurmountable. This - Some have simply stopped making interest payments altogether. Which would you prefer? AC making some payments to everyone, or no payments to anyone? This - I'm pretty sure AC will be certain of their legal footing on the decisions made and the changes implemented. Bear in mind, they not only have to balance the risk of legal action from lenders (over whom AC will believe they have control via the T&Cs signed up to by lenders) but also the legal risk from borrowers who are also in a a contractual agreement with AC and one in which the borrower possibly (probably?) has a stronger footing. This - I doubt AC see it as their problem. The risk warnings are abundant and the Appropriateness Test every existing and new lender has undertaken since Nov 2019 is a handy way of putting the responsibility back on the lender. Big or small, if you've invested inappropriately, AC aren't going to be in the hot seat over it. I would add that the AC management will have access to the size, number & distribution of the withdrawal requests, modelling of potential inflows, SM data, expected repayments, redemptions and future tranche drawdowns and will be able to run the number to determine the best & most effective way of fulfilling the withdrawal requests. As to legal action, I suspect that small investors are less likely or have the means to pursue such action compared to large investors so AC would probably be better served by satisfying the large investors first.
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alanh
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Post by alanh on Apr 11, 2020 19:20:43 GMT
It is a very good question iRobot. They have made a conscious decision to do this, presumably they gave it some thought. They must have realised that by changing from proportional to flat rate it was going to seriously affect the larger lenders and yet they decided to go ahead with it anyway. Why? I don't think it is a decision that the management of any business would have made if they thought that the business had a long term future. What would be the point of alienating a large chunk of your investor base? - its very unlikely any of them will ever come back. AND YET - they made this decision. Look at other platforms - all are struggling one way or another but none of them have changed their terms of business as regards how the investor payouts work. Consequently, no other platforms are suffering from the internal fighting going on here. One clear effect of this decision (also mentioned elsewhere on this forum) is that by paying off all the small investors first it is reducing the number of complaints/legal actions against them in the future. It is also probably the case that some of the bigger lenders have exceeded FCA guidelines so will have less of a case against AC for future losses. Is this why they have done it? Some kind of a**e covering exercise? - I think you over-estimate the number of investors (by headcount and by £'s invested) that are unhappy with ACs decisions given the circumstances. I also think that when the situation returns back to a semblance of how things were pre-March, an high number of those withdrawing funds AC now, will return. Maybe with lower sums, but that's not necessarily a bad thing. AC may have to adapt to having a less care-free lender base, but that's not insurmountable. This - Some have simply stopped making interest payments altogether. Which would you prefer? AC making some payments to everyone, or no payments to anyone? This - I'm pretty sure AC will be certain of their legal footing on the decisions made and the changes implemented. Bear in mind, they not only have to balance the risk of legal action from lenders (over whom AC will believe they have control via the T&Cs signed up to by lenders) but also the legal risk from borrowers who are also in a a contractual agreement with AC and one in which the borrower possibly (probably?) has a stronger footing. This - I doubt AC see it as their problem. The risk warnings are abundant and the Appropriateness Test every existing and new lender has undertaken since Nov 2019 is a handy way of putting the responsibility back on the lender. Big or small, if you've invested inappropriately, AC aren't going to be in the hot seat over it. Could I ask you why you think they made the decision? On your points: 1. I think we will have to disagree on this one. I don't think anyone is going to get away with treating one set of investors detrimentally compared to another. There are a lot of platforms out there and these guys will now just go elsewhere. Neutrals will also think twice as AC's actions beg the question "who's next?" - we had a set of rules, they changed overnight. It can happen again. 2. Under the current payout system large investors would be better off if they made no payouts at all due to the exchange of proportionate cash for smaller investors loans 3. I don't think the borrower comes into it. We are simply discussing the method by which AC pays out to investors. I do think the larger investors who are without doubt having to exchange their cash entitlement for others loans will have a very good case against AC. Lets not forget, it is very clear that EVERYONE has exactly the same proportion of everything in the access accounts - except when it comes to paying it out. Why? 4. I totally agree - thats the point I am making. They don't have to give a toss so it is another potential reason to target those investors. If they hadn't done this then we would be in a completely different situation. It would be like Ratesetter: "Instant access to your accounts that you have enjoyed for the last umpteen years is now suspended due to the coronavirus and a queueing system is now in place" - oh OK then, as expected, I will wait til my queued withdrawal reaches the front As opposed to AC: "Instant access is suspended and we have unilaterally decided to scrap the queue and replace it with a pool. And its a pool that ignores everyones proportional entitlement and just pays out a flat rate to the detriment of large investors" - cue total anarchy
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iRobot
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Post by iRobot on Apr 12, 2020 10:11:35 GMT
Could I ask you why you think they made the decision? I try not to think; that's why I'm in an Access Account! Seriously though, in the absence all the data, it's wholly speculation, so with that caveat firmly in place.... I don't think AC's managements' intentions were to orchestrate a "small investor bailout", I think it's an unintended consequence of them attempting to be 'fair to everyone' where their version of fairness is delivering equal £ repayments to all AA investors. My (speculative) assumption is that AC don't envisage a great amount of repayments being made over the next weeks/months and they would prefer to see everyone receive several hundreds of pounds, rather than some receive several thousands and others merely pennies.
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Apr 13, 2020 8:20:34 GMT
Whether you are right or wrong, IMO you are living in cloud cuckoo land if you think there is £2m a day going into a locked account when it could go instead into the same underlying loans at a higher rate of interest. Why? If people are investing long term, want an instant diversified portfolio without the hassle of choosing loans and the nominal protection of a provision fund then the fact the accounts are restricted access currently is a lesser consideration. I think you are underestimating the influence of convenience (and laziness). Some perhaps, but how many? At a quick glance, during 2019 the daily increase in total AAs was over £2m on only a handful of occasions, and AFAICS each time there was a major redemption so I doubt that there was ever £2m in new cash. And that was during the good times with instant or notice access.
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bg
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Post by bg on Apr 13, 2020 8:44:30 GMT
Why? If people are investing long term, want an instant diversified portfolio without the hassle of choosing loans and the nominal protection of a provision fund then the fact the accounts are restricted access currently is a lesser consideration. I think you are underestimating the influence of convenience (and laziness). Some perhaps, but how many? At a quick glance, during 2019 the daily increase in total AAs was over £2m on only a handful of occasions, and AFAICS each time there was a major redemption so I doubt that there was ever £2m in new cash. And that was during the good times with instant or notice access. When the balance in the access accounts increases it is always net new cash (ie deposits minus withdrawals) or interest payments received from borrowers. Capital redemption's have no impact on the account balance. All it does is alter the composition between cash and loans. So if the account balance was £100m made up of £10m cash and £90m loans, if a £2m loan repaid then the account balance would remain at £100m but it would be made up of £12m cash and £88m loans.
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alender
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Post by alender on Apr 13, 2020 9:06:20 GMT
Some perhaps, but how many? At a quick glance, during 2019 the daily increase in total AAs was over £2m on only a handful of occasions, and AFAICS each time there was a major redemption so I doubt that there was ever £2m in new cash. And that was during the good times with instant or notice access. When the balance in the access accounts increases it is always net new cash (ie deposits minus withdrawals) or interest payments received from borrowers. Capital redemption's have no impact on the account balance. All it does is alter the composition between cash and loans. So if the account balance was £100m made up of £10m cash and £90m loans, if a £2m loan repaid then the account balance would remain at £100m but it would be made up of £12m cash and £88m loans. Is there really any significant new cash deposits now?
So where are the Capital redemptions going because only a small proportion is being passed to lenders in the withdraw pool, surly the capital redemptions if not paid out are the composition between cash and loans less any funds going into new tranches of exiting loans (as AC stated no new loans) which AC have promised and are/or are intending to use lenders capital repayments.
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alanh
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Post by alanh on Apr 13, 2020 9:32:54 GMT
When the balance in the access accounts increases it is always net new cash (ie deposits minus withdrawals) or interest payments received from borrowers. Capital redemption's have no impact on the account balance. All it does is alter the composition between cash and loans. So if the account balance was £100m made up of £10m cash and £90m loans, if a £2m loan repaid then the account balance would remain at £100m but it would be made up of £12m cash and £88m loans. Is there really any significant new cash deposits now?
So where are the Capital redemptions going because only a small proportion is being passed to lenders in the withdraw pool, surly the capital redemptions if not paid out are the composition between cash and loans less any funds going into new tranches of exiting loans (as AC stated no new loans) which AC have promised and are/or are intending to use lenders capital repayments.
I keep records of these numbers. One year ago the access account balances totalled £180m. Today they total £215m. I don't know where this £2m number comes from but the inflows into the access accounts have never been anywhere remotely near that number even when they were functioning correctly. Now that they have become locked in with a 0.9% interest rate deduction they look uninvestible and thats before any consideration of trustworthyness of the management or survival of the platform.
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bg
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Post by bg on Apr 13, 2020 9:34:49 GMT
When the balance in the access accounts increases it is always net new cash (ie deposits minus withdrawals) or interest payments received from borrowers. Capital redemption's have no impact on the account balance. All it does is alter the composition between cash and loans. So if the account balance was £100m made up of £10m cash and £90m loans, if a £2m loan repaid then the account balance would remain at £100m but it would be made up of £12m cash and £88m loans. Is there really any significant new cash deposits now?
Depends what you mean by significant, probably £2m (net of the withdrawals that have been paid) since the withdrawal restrictions came in. So given people in the queue have received nearly £500 per account, if you estimate how many people you think are in the queue and multiply by 500 you can then add £2m to it and get an estimate for new cash deposits. This has been covered at length elsewhere. The proportion that hasn't been paid out has been used to fund some contractual withdrawals on development loans but the bulk of it has increased the amount of cash held within the access accounts. When the accounts were frozen there was only around £2m of cash left in the accounts (hence the freeze) but that has since been built up to around £10m. By way of comparison on 15 Jan the access accounts held over £30m in cash.
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bg
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Post by bg on Apr 13, 2020 9:43:58 GMT
Is there really any significant new cash deposits now?
So where are the Capital redemptions going because only a small proportion is being passed to lenders in the withdraw pool, surly the capital redemptions if not paid out are the composition between cash and loans less any funds going into new tranches of exiting loans (as AC stated no new loans) which AC have promised and are/or are intending to use lenders capital repayments.
I keep records of these numbers. One year ago the access account balances totalled £180m. Today they total £215m. I don't know where this £2m number comes from but the inflows into the access accounts have never been anywhere remotely near that number even when they were functioning correctly. Now that they have become locked in with a 0.9% interest rate deduction they look uninvestible and thats before any consideration of trustworthyness of the management or survival of the platform. That is not correct, there have been quite a lot of days where net inflows have exceeded £2m, I can give you the dates if you like. Of course there have been days when there have been net withdrawals as well.
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alender
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Post by alender on Apr 13, 2020 9:45:37 GMT
Is there really any significant new cash deposits now?
Depends what you mean by significant, probably £2m (net of the withdrawals that have been paid) since the withdrawal restrictions came in. So given people in the queue have received nearly £500 per account, if you estimate how many people you think are in the queue and multiply by 500 you can then add £2m to it and get an estimate for new cash deposits. This has been covered at length elsewhere. The proportion that hasn't been paid out has been used to fund some contractual withdrawals on development loans but the bulk of it has increased the amount of cash held within the access accounts. When the accounts were frozen there was only around £2m of cash left in the accounts (hence the freeze) but that has since been built up to around £10m. By way of comparison on 15 Jan the access accounts held over £30m in cash. Depends what you mean by significant.
I mean a sum of money where it will not take at least 20+ years for me to get out my money in so called AAs. This has been far below the capital repayments on Loans I own, if this is P2P as advertised this is my money.
This has been covered at length elsewhere. The proportion that hasn't been paid out has been used to fund some contractual withdrawals on development loans
This is because AC promised borrowers money in the future that did not have, it seems a bit like a Ponzi scheme.
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