|
|
Post by carrdelling on May 1, 2020 8:10:50 GMT
On examining my loan book I find that Ratesetter have invested 21% of my investment in just ONE loan. Why should Ratesetter do this instead of diversifying into several smaller loans as is normally the case? It has never been the case (e.g. at least not in the way that other P2P platforms like Zopa work). In Ratesetter, the protection usually comes from the fact that there is a Provision Fund available to pay in case of bad debt. But automatic chunking and diversification has never been a feature of this platform (to the best of my knowledge). (all of this of course, unless things have changed a lot recently with the new colourful website  )
|
|
|
|
Post by oppsididitagain on May 1, 2020 8:17:48 GMT
On examining my loan book I find that Ratesetter have invested 21% of my investment in just ONE loan. Why should Ratesetter do this instead of diversifying into several smaller loans as is normally the case? Yes, thats how RS work. Its a pooled lending/risk pot. They don't work like other platforms. You put an amount on the platform and the next borrower comes along and matches with you. RS risk is pooled, so if this loan goes bad, the PF in theory should compensate you. RS works differently to other platforms. However, there could be a scenario whereby, this loan goes bad and the PF pays out , you will get all your money back. If you had 1% of your money matched to 21 borrowers , and one borrower defaulted. You would only get that 1% of the loan back.
|
|
|
|
Post by davee39 on May 1, 2020 8:42:00 GMT
If the pf could not pay out ALL lenders would share the cost equally, so you would still be no worse off than with smaller chunks. Initially the cost would be covered by reducing overall interest payments, there might then be capital losses, but the risk is pooled across all lenders.
|
|
jcb208
Member of DD Central
Posts: 821 
Likes: 608
|
Post by jcb208 on May 1, 2020 8:46:54 GMT
If the pf could not pay out ALL lenders would share the cost equally, so you would still be no worse off than with smaller chunks. Initially the cost would be covered by reducing overall interest payments, there might then be capital losses, but the risk is pooled across all lenders. has described it just as I was led to believe which is correct
|
|
r00lish67
Member of DD Central
Posts: 2,691
Likes: 4,048
|
Post by r00lish67 on May 1, 2020 8:49:51 GMT
If the pf could not pay out ALL lenders would share the cost equally, so you would still be no worse off than with smaller chunks. Initially the cost would be covered by reducing overall interest payments, there might then be capital losses, but the risk is pooled across all lenders. Please point me in the directions of the T&C's so that I can see where it says that I have to share the losses incurred by over investor's loans if the PF fails. Have a read through thisA snippet (apologies for bible-esque formatting) "If at any time, RateSetter reasonably believes that the Provision Fund does nothave sufficient funds (including expected future inflows) to cover current orexpected borrower defaults, RateSetter may implement a “Stabilisation Period”.In this scenario RateSetter will implement an “Interest Reduction”. An InterestReduction is a reduction (or ‘haircut’) to interest for all investors on all their
existing investments (note, the reduction will not apply to future investments).This reduction is paid in full to the Provision Fund.Should the Interest Reduction or Interest Reductions not be sufficient, RateSetter
will implement a “Capital Reduction”, which like the Interest Reduction, would
be a reduction to capital made to all investors on all of their existing investments.
This reduction is paid in full to the Provision Fund."And, lo, it was foretold. All shall be well, and all manner of things shall be well (providing the PF doesn't run out of dollar )
|
|
)
