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Post by lingield on Jun 19, 2020 11:57:10 GMT
I have a very strong hunch that RS are doing the all (or most) of the new lending from the Access market, including re-financing loans that are in the 5 year and 1 year market. If correct, this would skew the timing of the RYIs for the Access market.
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Post by oppsididitagain on Jun 19, 2020 12:01:56 GMT
People say it’s been discussed many times but I must have missed it. My view was that it is easier to sell loans with higher rates than those with lower rates. Hence, the 5 year market loans are more attractive than those at 3%. But this was view was shot down without an explanation as to why. So, what is the reason that the 5 year market’s RYIs are releasing faster than the Access market’s RYIs? gg Liquidity - Where to you think RS get the money to repay you ? Lots of factors have caused the problems. RS changed the re-investment settings last year to make it difficult to not reinvest along with adding Plus and MAX to slow down the withdrawals when things got tough, its attracted more money but also it also kept rates low so they could write new loans. This in effect creates a snowball of constant reinvesting and growing funds, which get re-invested etc etc. It probably why they started using the access market to fill loans in the 1yr and non amortising space as it was cheaper money. I think there is an argument, and I have made this known to RS. When they introduced 1yr loans and non amortising loans to access last year, they should be able to unwind these loans via the other markets. But simple lack of liquidity is the main problem.
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starfished
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Post by starfished on Jun 19, 2020 12:57:53 GMT
The Access queue is far bigger than the others, that's probably why it appears to be moving more slowly. When the world has returned to normal economic conditions I think RS should take a hard look at the way their products operate and make changes to ensure that this sort of liquidity problem can never happen again. I don't see any future for 'Access' type accounts in P2P as consumer confidence in them has vanished. Maybe they should just offer fixed term products in future? That's assuming Metro Bank even want to continue to accept retail lenders - they may decide to go down the institutional route instead. Agree, the so called 'Access' account should only have contained loan contracts for a maximum of 12 months in my opinion, as it's turned out to be a contradiction in terms! Then the return offered would have been closer to 1% rather 3%. The 2% difference was the compensation for the liquidity risk you were agreeing to carry...
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one21
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Post by one21 on Jun 19, 2020 13:13:20 GMT
Agree, the so called 'Access' account should only have contained loan contracts for a maximum of 12 months in my opinion, as it's turned out to be a contradiction in terms! Then the return offered would have been closer to 1% rather 3%. The 2% difference was the compensation for the liquidity risk you were agreeing to carry... I doubt it, more like for lack of FSCS protection!
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robski
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Post by robski on Jun 19, 2020 14:23:26 GMT
I have a very strong hunch that RS are doing the all (or most) of the new lending from the Access market, including re-financing loans that are in the 5 year and 1 year market. If correct, this would skew the timing of the RYIs for the Access market. Spot on there. If a property developer asks for a 3 month extension the original loan is being settled and a new 3 month loan taken out against the access market. Do you have any proof for this? With some recent large amounts on 1 year it wouldnt seem to be the only case, but it could be selectively And even if it is, RS are clearly wanting to get rid of 1 year and 5 year, so its natural that over time all lending will go to Access (+,max) and nothing to the others, letting them die out over time. As someone who wants to see RS survive I dont want them to damage the business to rush to satisfy those who want their money now, who should have accepted the potential lock in
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robski
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Post by robski on Jun 19, 2020 14:24:43 GMT
Then the return offered would have been closer to 1% rather 3%. The 2% difference was the compensation for the liquidity risk you were agreeing to carry... I doubt it, more like for lack of FSCS protection! Actually its both, potential lock in and lack of FSCS Individuals may place more or less emphasis on either, but in reality your extra interest should have been set at a level to cover you individual position in regards to both those factors!
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Post by lingield on Jun 19, 2020 19:58:41 GMT
Spot on there. If a property developer asks for a 3 month extension the original loan is being settled and a new 3 month loan taken out against the access market. Do you have any proof for this? With some recent large amounts on 1 year it wouldnt seem to be the only case, but it could be selectively And even if it is, RS are clearly wanting to get rid of 1 year and 5 year, so its natural that over time all lending will go to Access (+,max) and nothing to the others, letting them die out over time. As someone who wants to see RS survive I dont want them to damage the business to rush to satisfy those who want their money now, who should have accepted the potential lock in My message said it was a 'hunch', but the access queue appears to be moving too slowly. If my suspicions are correct, I think the Metrobank deal will happen because the Ratesetter team would never want this to come out in the 'wash' - as it would not be hard to prove that Ratesetter had misappropriated Access market funds to effectively generate fees for themselves (ie. A Loan is in the 1/5 year market and then suddenly the New A Loan is in the Access market - no real forensic skill required just basic information). If this is the case, RS will have jumped into the legal quagmire with both feet and exposed themselves to potential criminal and civil liability - like all mistakes, it probably just started as a 'we will do this only once (or for one month)'. If my hunch is correct I think RS will get away with it if the Metrobank deal happens and RYI investors get out at par in fairly short order but if they do not, they are potentially exposing themselves to greater potential liability. The defence would that the New A Loan was genuine, but I am not sure that would be credible. I think the Metrobank deal will happen, even if Metrobank acquire RS for £1 (probably structured as £62 million (to save face) with a warranty package that enables the price to be reduced down to £1), but with M&A you never know....so much is about personal ego on both sides.
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Post by Deleted on Jun 19, 2020 21:25:23 GMT
RS can still gain from processing Access requests. Most of the loans appear to be refinanced at less than 4%, mostly around 3%, whereas many Access loans were paying lenders far in excess of that. My average Access rate before I sold them at the beginning of March was 7.9% and many others are/were in a similar position by taking advantage of rate spikes.
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Post by shanghaiscouse on Jun 19, 2020 22:40:14 GMT
Gosh everyone is very polite on here, you should see the comments on TrustPilot especially re; the Access account....
I don't understand why does anyone think that Metro Bank would bale out their interest (and likely capital) "losses" on their loans? Or "sort out" the delays in paying out Access? Not going to happen in either case. Its all about the RS shareholders getting something back on their investment, you are collateral damage and expendable. You are just a user of the platform and have no equity. Nobody needs your approval to get the deal done. So sorry, you are the last thing on their mind.
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Post by freefalljunkie on Jun 20, 2020 7:19:24 GMT
Gosh everyone is very polite on here, you should see the comments on TrustPilot especially re; the Access account.... I don't understand why does anyone think that Metro Bank would bale out their interest (and likely capital) "losses" on their loans? Or "sort out" the delays in paying out Access? Not going to happen in either case. Its all about the RS shareholders getting something back on their investment, you are collateral damage and expendable. You are just a user of the platform and have no equity. Nobody needs your approval to get the deal done. So sorry, you are the last thing on their mind. I think you are missing a key point. No one needs our approval, but any deal for a Metro Bank takeover would most certainly require FCA approval, and that is highly unlikely to be forthcoming if the FCA think private investors are going to get screwed. A Metro Bank deal won't solve everything, but RS investors are far more likely to get their money back if it does happen. Ratesetter on its own is doomed, which is of course why they are desperately seeking a fire sale. Edited to add, I have just been reading the reviews on Trustpilot. Blimey. These things matter to a business these days, a lot. The reputational damage to Ratesetter from the RYI delays is immense, regardless of arguments about whether it is their fault or not. More convinced than ever that Ratesetter's business has no future.
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Post by jochietoch on Jun 20, 2020 8:14:01 GMT
[...] any deal for a Metro Bank takeover would most certainly require FCA approval, and that is highly unlikely to be forthcoming if the FCA think private investors are going to get screwed. A Metro Bank deal won't solve everything, but RS investors are far more likely to get their money back if it does happen. Agree that the FCA will require customers to be treated fairly in a takeover, but why would that entail them getting their money back quickly and in full? There's no reason for them to do that any more than to bail out investors in poorly performing stocks. Default risk and liquidity risk are inherent to personal loans, and that is the product RS investors are in. I don't think there's any requirement on RS or Metro to top up the provision fund with their own money. While personally I am somewhat critical of the extent to which RS have made their product look like deposits in some of their advertising, the FCA doesn't seem to have an issue with it and fair enough it does say "Capital at risk". Note that "Capital at risk" goes well beyond "No FSCS protection" as the FSCS only covers funds held by the protected institution, not invested funds. Even if RS had been FSCS protected, that really only would insure the unmatched funds on the market, defaults and illiquidity would still be your own problem.
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Post by freefalljunkie on Jun 20, 2020 8:36:50 GMT
[...] any deal for a Metro Bank takeover would most certainly require FCA approval, and that is highly unlikely to be forthcoming if the FCA think private investors are going to get screwed. A Metro Bank deal won't solve everything, but RS investors are far more likely to get their money back if it does happen. Agree that the FCA will require customers to be treated fairly in a takeover, but why would that entail them getting their money back quickly and in full? Agree it doesn't necessarily. However the worst case scenario is Ratesetter on its own going bust and investors having to try and recover money from an administrator. A deal with Metro Bank would avoid that.
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Post by jochietoch on Jun 20, 2020 8:58:30 GMT
Agree that the FCA will require customers to be treated fairly in a takeover, but why would that entail them getting their money back quickly and in full? Agree it doesn't necessarily. However the worst case scenario is Ratesetter on its own going bust and investors having to try and recover money from an administrator. A deal with Metro Bank would avoid that. Yes, definitely, it'll remove that worry, even if they move to wind down the retail investor side of things. And who knows they may consider it a useful gesture reputationally to bail out retail investors and take the existing loans on their own books. No idea if that would make economic sense but that'd be up to them.
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Post by jochietoch on Jun 20, 2020 9:08:42 GMT
As an aside TrustPilot reviewers seem particularly harsh on RS if you compare to Funding Circle which in my view has handled things considerably worse (lack of communication, lock-in of investors, persistent smell of dishonesty of loan due diligence around the time of their IPO). But then their borrowers seem to be really happy (and who wouldn't be - have some free money, no strings attached!) and they probably give them a bit of a nudge as to leaving five-star reviews.
But also just maybe this does show the extent to which people went into RS thinking of it as a juicier deposit. If that's the case I still think they have their advertising to blame to some extent - if a few people didn't get the message, well maybe they didn't pay enough attention; but if nobody did then perhaps the messaging was not so clear after all...
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Greenwood2
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Post by Greenwood2 on Jun 20, 2020 9:22:09 GMT
As an aside TrustPilot reviewers seem particularly harsh on RS if you compare to Funding Circle which in my view has handled things considerably worse (lack of communication, lock-in of investors, persistent smell of dishonesty of loan due diligence around the time of their IPO). But then their borrowers seem to be really happy (and who wouldn't be - have some free money, no strings attached!) and they probably give them a bit of a nudge as to leaving five-star reviews.
But also just maybe this does show the extent to which people went into RS thinking of it as a juicier deposit. If that's the case I still think they have their advertising to blame to some extent - if a few people didn't get the message, well maybe they didn't pay enough attention; but if nobody did then perhaps the messaging was not so clear after all...
Didn't all lenders have to pass (a very simple) test to prove they understood their money was at risk, etc? It does seem surprising that some people seemed to have no idea how the accounts work, or what the risks were, although no one could have predicted the effect of Covid on 'normal market conditions'. I guess they just saw the headline rates and the PF and away we go.
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