Discussion on RYI requests and tracking (RS)

So, we now have RS’s performance figures for April. I am tracking these versus previous months to extract % investor reinvestment ratio, because it drives how fast the RYI queue can move. This covers the peak RYI period stated by RS. But it doesn’t include the effect of the interest rate reduction on 4th May.

April new lending (increase in total lent): £19.5m (March £44.3m)
Assets under management at start of month: £830.7m (£854m)
April capital returned to investors (reduction in Assets Under Management): £28.6m (March £23.3m)
Capital outflow rate per month: April 3.56% (March 2.73%)
RYI ratio = (capital returned)/(capital available for return)=(returned)/(returned + lent)
April RYI ratio: 60% (March 35%)

This ignores capital available for lending, but not lent. However, there’s only about £3m in there now across all lending queues, which doesn’t figure much in the grand scheme of things.

We have reached the point where the current capital outflow rate of 3.56%, inverted, winds the platform down in 28 months. This is absolutely in line with RS’s stated average loan duration of 28 months. For this rate to stop, lenders have to do something *active*, ie switch their re-lending back on, which I can’t see what would trigger that positive vote of confidence.

Honestly, I’m calling it now. The platform is in terminal wind-down. We just have to accept that *most* RYIs are sat in a queue similar in length to the underlying loan duration. The speed of RYIs will decrease sharply (which we are starting to see in the weekly figures), now less than half the lenders are re-lending.

I think you have left out the bit I have added to your post, not that it was hard to work out what the figure was for.

I would agree that the current mode is 'wind down' but that was almost inevitable with the RYI demand, unless they had chose to completely ignore them.

I doubt that is the plan though, events elsewhere will dictate what is possible for them going forwards. As indeed it will for most of the sector.

Edit, very similar to what chris1200 posted whilst I was typing, think of this as the kinder version.

I think you *are* missing something.

“If investors continue to withdraw as they have been”, is the wrong measure, because it isn’t how the Access account works. There are only three places for incoming repayment money to go: re-lend, RYI, lending queue. We can see that repayments aren’t sitting in lending queue at high interest rate. Therefore all money not re-lent has RYI’d. That tells us the exact % RYI. Because RS don’t *allow the option* to “only take this month’s money”, the % of this month’s money exactly equals the % of total assets under management that have been RYI’d! 

This means that 60% of £800m = £480m are currently in the RYI queue. 
Ratesetter took a very, very foolish decision a year ago to momentum sell Access account by insisting on automated re-investment. The problem is that momentum works in both directions. Investors now don’t have to “continue” to do anything. Once they have placed their RYI, it happens automatically, guaranteed, unless they specifically cancel it. Hands up who is going to cancel when they have waited two months already for their RYI? Do you think more people will cancel their RYI after waiting *six months* for their money?  Those 60% of investors are *already gone*, they just haven’t been served yet.

Another way to look at this:

RS have been implying that “only” 10% of asset value has been RYI’d, but avoided saying that explicitly. If that were true, how could they possibly have only lent £19.5m in April, rather than a more normal £44m? It can’t be that they are just being more choosy about who to lend to, otherwise money would be stacking up in the lending queues, at a rate of £20m per month. And it isn’t. So, the constraint is on the amount of funds they have available to lend, not on finding suitable borrowers.
There *used* to be a bucket of people who made a decision to lend each month, depending on interest rate. Ratesetter threw all those investors in the bin a year ago. Now, the only people left are either - automatically set to reinvest, or have already requested to withdraw and are waiting for their money. No in-between. And the automatic reinvesters just dropped by 60%

RS may have more options in a few months' time when the economy has started going again.  The trick is to survive until then.  

Great analysis above - well done chaps

I am very disappointed and annoyed with RS - I missed the change to their "access" accounts and would not have invested if I had been aware if it and  understood it fully

I (and many others) have asked about the size of the queue and had no reply -  I can't possibly imagine why! As to this complete goands they don't know what it is  - don't get me started!

Allied with the above comments - I have concluded either rightly or wrongly that all this talk of large sums being released etc is twaddle and PR spin - to me the queue is moving incredibly slowly and is going to take about  2 years at the current rate to clear if I have the right figures. In fact that would not be much shorter for  my 5 figure sum to be repaid if simply left to be withdrawn at the end of the current contracts.


If FS had been honest and said - "we have a mega problem here and have decided to basically freeze the Access Account"  I would not have minded so much.
Their strategy does make sense to me and I guess they are banking on the economy going back to normal and a greater inflow of funds with hopefully a not too high default rate.

I was told to expect my funds to be returned within about 3 months - well we will see!

Would a large investment bank me interested in taking them over- quite possibly - so let us hope so!

I still don't really follow how this calculation produces the RYI queue value and there have been some other points made regarding reinvention of the RS business which seem more than a little farfetched to me, but I'll leave these for now. Just trying to illustrate my point that we basically knew this already:

On the contrary, they've said that 9 out of 10 investors continue to invest and the fact that this definitely does not mean only 10% of funds have been RYI'd has been done to death on this forum. I don't think any of us actually thought this was the case as it was blindingly obvious it wasn't just from looking at the amount already processed vs. the dent in the queue it's made.

Again, this point has been made countless times on this forum to those continually demanding that RS tell us the RYI queue size. I, and others, have repeatedly said that RS obviously don't want to reveal this amount because it's likely very big. As much as it might monetarily satisfy some people's anxieties, revealing this number would likely cause a further run on withdrawals. That wouldn't be in RS's interests or ours.

I agree exactly. RS were very careful with their phrasing. But they wanted a casual investor *not* following this forum to be left with the impression that only 10% of *fund value* had been RYI’d.

Exactly one month ago, I posted the same calculation on the forum, showing 37% RYI based on that months published data. Nobody at that time got particularly irate. If you are accusing me of shouting fire in a crowded theatre, I’m just analysing the published data. Everyone’s free to do their own calculation, and I rather expect people to do so.

If you believe there’s a different way to munge the performance figures that comes up with a different answer, or you think there’s a logical or arithmetic flaw in what I said, please do post your analysis. I could have a hidden wrong assumption. If you think about it, you’ll realise that the main reason I posted is that I would be more than happy for somebody to poke a hole in the reasoning, and for that to lead to a less worrying conclusion. 

But it makes no sense to complain “we all know the situation is bad, it’s dangerous to analyse official published data to quantify how bad”. That’s very much why I previously responded to a demand for queue-length as “no point in complaining, RS will tell us the answer soon anyway, we just need to listen properly and think”. Any investor, journalist or analyst can go onto the RS website, directly read the same performance data, and work out the numbers too, it’s not a secret.