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Post by stuartassetzcapital on Jun 25, 2020 10:18:35 GMT
Quite astounding claims and they cannot be left to mislead others. What you state is the opposite of our website risk warnings. The AA workings are directly affected by the investors' behavior, quite simply more investors wanting withdrawals than deposits for a period and that was always clearly stated and understood. This is investor behavior due to the situation, not AC changes. This behavior is, however, not surprising given the shock everyone got a few months ago but it is now diminishing again. We are not a bank account, you are invested in illiquid loans and always have been and need to hold to term unless there is enough buyer demand to buy off you early, which there always has been till March and will be again in the future we trust. We will continue to seek to create new solutions to a very difficult global problem and will not leave our AA investors to the mercy of the current situation, fail to make improvements and just move off to other things as you suggest. We could easily make decisions that just put the AAs into a 5 year run off or so and move on. It is far harder and painful and costly to do the right thing and that is what we are doing. Whilst lenders recognise the impact of a lack of inflows on liquidity, investors did not sign up to a commitment to fund never ending tranches of investment which are lent ain’t increasingly spurious GDVs. All we ask is redeemed funds are directed to the cash account. If AC needs to bolster capital reserves possibly they should launch a 365 day access account, offering say 8% in order to equitably address the issue of capital flight. If we were to do what you suggest and walk away from all of your borrowers mid project and divert all cash to lenders rather than use it for committed borrowers by stopping the automatic investing of AA cash (as is part of their day to day operation) then that wouldn't produce any redemptions bounty at all for investors. Quite the opposite. Such a decision would quite probably mean that for fairness, we would need to close the accounts fully to stop some people unfairly getting their money early before the final outcome is known, put the AAs into run off and eventually return all cash to every individual investor in the AA. Forced sale of loan security would mean losses could be substantial right now. Changing the terms of the AA accounts is therefore quite a thing to request and it is why we have not done it. This hopefully explains why changing material operational methods within the AAs for just some investors wouldn't actually help those investors, and instead would harm everyone. With some patience and a following wind on the economic rebound we still expect to be in the upper quartile of all investment class performance. One of the benefits of iliquid investments without any guarantee of liquidity is that we firstly do not have to become forced sellers and secondly can pay away the vast majority of all investment returns to investors. This is why we operate an investment platform rather than something else, in order to deliver raw investment returns, with accompanying risks, and in the end we will be judged on long term annual net performance. Banks are the reverse and their guarantees are hugely costly in several ways and it leads them to pay away almost none of their income from lending your money. Our model is different and more transparent but we accept it is difficult times for people and we need trust in our professionalism of our custodianship of the portfolio of assets. Hopefully that explains why we will not make those changes.
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cb25
Posts: 3,528 
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Post by cb25 on Jun 25, 2020 10:32:14 GMT
Quite astounding claims and they cannot be left to mislead others. What you state is the opposite of our website risk warnings. The AA workings are directly affected by the investors' behavior, quite simply more investors wanting withdrawals than deposits for a period and that was always clearly stated and understood. This is investor behavior due to the situation, not AC changes. This behavior is, however, not surprising given the shock everyone got a few months ago but it is now diminishing again. We are not a bank account, you are invested in illiquid loans and always have been and need to hold to term unless there is enough buyer demand to buy off you early, which there always has been till March and will be again in the future we trust. We will continue to seek to create new solutions to a very difficult global problem and will not leave our AA investors to the mercy of the current situation, fail to make improvements and just move off to other things as you suggest. We could easily make decisions that just put the AAs into a 5 year run off or so and move on. It is far harder and painful and costly to do the right thing and that is what we are doing. Whilst lenders recognise the impact of a lack of inflows on liquidity, investors did not sign up to a commitment to fund never ending tranches of investment which are lent against increasingly spurious GDVs. All we ask is redeemed funds are directed to the cash account. If AC needs to bolster capital reserves possibly they should launch a 365 day access account, offering say 8% in order to equitably address the issue of capital flight. I imagine that when AC agree a loan with tranche drawdowns, they are contractually obliged to fund tranche 2, 3, ... until completion. I have more money in the AAs than in the MLA and admit I never gave a thought to where the tranche money came from, however it's clear it was never from the MLA as investments there are entirely at the discretion of the lender. I imagine the AAs were always obliged to fund future tranches, but lenders (including me) never gave it a thought until we hit this liquidity problem and it became apparent.
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ian
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Post by ian on Jun 25, 2020 10:37:46 GMT
Whilst lenders recognise the impact of a lack of inflows on liquidity, investors did not sign up to a commitment to fund never ending tranches of investment which are lent ain’t increasingly spurious GDVs. All we ask is redeemed funds are directed to the cash account. If AC needs to bolster capital reserves possibly they should launch a 365 day access account, offering say 8% in order to equitably address the issue of capital flight. If we were to do what you suggest and walk away from all of your borrowers mid project and divert all cash to lenders rather than use it for committed borrowers by stopping the automatic investing of AA cash (as is part of their day to day operation) then that wouldn't produce any redemptions bounty at all for investors. Quite the opposite. Such a decision would quite probably mean that for fairness, we would need to close the accounts fully to stop some people unfairly getting their money early before the final outcome is known, put the AAs into run off and eventually return all cash to every individual investor in the AA. Forced sale of loan security would mean losses could be substantial right now. Changing the terms of the AA accounts is therefore quite a thing to request and it is why we have not done it. This hopefully explains why changing material operational methods within the AAs for just some investors wouldn't actually help those investors, and instead would harm everyone. With some patience and a following wind on the economic rebound we still expect to be in the upper quartile of all investment class performance. One of the benefits of iliquid investments without any guarantee of liquidity is that we firstly do not have to become forced sellers and secondly can pay away the vast majority of all investment returns to investors. This is why we operate an investment platform rather than something else, in order to deliver raw investment returns, with accompanying risks, and in the end we will be judged on long term annual net performance. Banks are the reverse and their guarantees are hugely costly in several ways and it leads them to pay away almost none of their income from lending your money. Our model is different and more transparent but we accept it is difficult times for people and we need trust in our professionalism of our custodianship of the portfolio of assets. Hopefully that explains why we will not make those changes. Firstly these are investors funds which they are entitled to have access to at the earliest opportunity. Secondly you completely ignore the obvious supply & demand equation. Give borrowers access to tranche funding however; clearly as the landscape has changed for lenders (reduced rates for an inferior product) the landscape has changed for borrowers. As I alluded to a 180 day /365 day account paying premium interest which is funded by those borrowers, who need access to tranche funding. This funding should command which a premium rate? It’s simple supply and demand. Assetz are charging us lenders and borrowers additional fees why shouldn’t lenders be able to command a premium interest rate?
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Post by crabbyoldgit on Jun 25, 2020 10:42:33 GMT
i always saw the auto accounts as a a way to bin the underwriters and there costs to AC and others, maybe it all hail the return of the underwriter s in the future. I guess they take on the whole loan risk at the beginning until they can shift loan bits at a profit on the sm.
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Post by stuartassetzcapital on Jun 25, 2020 10:44:54 GMT
If we were to do what you suggest and walk away from all of your borrowers mid project and divert all cash to lenders rather than use it for committed borrowers by stopping the automatic investing of AA cash (as is part of their day to day operation) then that wouldn't produce any redemptions bounty at all for investors. Quite the opposite. Such a decision would quite probably mean that for fairness, we would need to close the accounts fully to stop some people unfairly getting their money early before the final outcome is known, put the AAs into run off and eventually return all cash to every individual investor in the AA. Forced sale of loan security would mean losses could be substantial right now. Changing the terms of the AA accounts is therefore quite a thing to request and it is why we have not done it. This hopefully explains why changing material operational methods within the AAs for just some investors wouldn't actually help those investors, and instead would harm everyone. With some patience and a following wind on the economic rebound we still expect to be in the upper quartile of all investment class performance. One of the benefits of iliquid investments without any guarantee of liquidity is that we firstly do not have to become forced sellers and secondly can pay away the vast majority of all investment returns to investors. This is why we operate an investment platform rather than something else, in order to deliver raw investment returns, with accompanying risks, and in the end we will be judged on long term annual net performance. Banks are the reverse and their guarantees are hugely costly in several ways and it leads them to pay away almost none of their income from lending your money. Our model is different and more transparent but we accept it is difficult times for people and we need trust in our professionalism of our custodianship of the portfolio of assets. Hopefully that explains why we will not make those changes. Firstly these are investors funds which they are entitled to have access to at the earliest opportunity. Secondly you completely ignore the obvious supply & demand equation. Give borrowers access to tranche funding however; clearly as the landscape has changed for lenders (reduced rates for an inferior product) the landscape has changed for borrowers. As I alluded to a 180 day /365 day account paying premium interest which is funded by those borrowers, who need access to tranche funding. This funding should command which a premium rate? It’s simple supply and demand. Assetz are charging us lenders and borrowers additional fees why shouldn’t lenders be able to command a premium interest rate? Without creating new accounts that is possible in the new MLA lending process and under review. Creating more accounts is reversing the simplification trend and not ideal as complexity of choice reduces investment which isn't good for existing investors.
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jlend
Member of DD Central
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Likes: 1,465
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Post by jlend on Jun 25, 2020 10:53:43 GMT
All of these might be valid worries before last year but they are all now covered by the regulatory requirements on how provision funds are managed and communicated. If the PF states that it covers known risks of loss then that is true. No future PF income is allowed for in that calculation, just cash holdings in the PF. if there are any known issues with loans that might lead to a loss then that is ringfenced immediately as cash in order to permit continued trading. If the PF did not have enough cash for this then various outcomes may then happen including freezing the accounts to all trading, extracting those new problem loans that didn't have 100% PF coverage for their expected losses etc. That could happen or it might not. Adjustments to interest rates are now creating a substantial PF top up in cash for the AAs. Future income still looks strong. defaults have been very low recently, albeit partly due to forbearance. All loans are secured. Also, to say the PF never pays out is incorrect, it has and it will. More transparency would help. For example 1.Telling us how much has been ring fenced in the PFs for each loan, rather than the total amount ring fenced. E.g. Loan xx has yy ring fenced. 2. Updating the PF stats more frequently, say every month, including details of any money moved between the PFs. 3. Updating the losses and defaults stats more often. Last update was January. 4. For lenders that have previously sold out of the access accounts, letting us see the split of loans and loan details in the access accounts before we invest. I think this is more important now than previously. It is difficult assessing the risk particularly when we can't see suspended loans. 5. A list of loans where the PFs have paid out and how much has been paid for each loan. Am sure others have ideas about what would help encourage more lending in the AAs which is to everyones benefit including ACs. Some may disagree with some of the ideas above, it is just meant to prompt a conversation between lenders and AC. Right now I can understand why lenders are wary, even given the impact of the virus and the FCA rules. More timely and detailed information may help. I worry about statements like this "If the PF states that it covers known risks of loss then that is true" as I don't know what AC have assumed for each loan in the PF ringfencing and it may be very different to my thoughts.
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alender
Member of DD Central
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Post by alender on Jun 25, 2020 11:04:54 GMT
If "P2p was, is and always will be, an illiquid investment" then AC should not have advertised it differently and not stated there was never any problems with getting money out and could not see any problems in the future. It would be good if people stopped making straw man arguments to put down people with different views and try to silence them with statements like "The bleating on this forum is ridiculous".
However that is not the issue, it is that AC have completely changed the AAs since the lock down and if we disagree it makes no difference as they have locked us in and do not care about us, it is fast becoming a defunct product and AC will now look for business in new areas and leave the AA holder out to dry as I predicted months ago. Great British Business Account & Green Energy Account are examples of what AC do.
Quite astounding claims and they cannot be left to mislead others. What you state is the opposite of our website risk warnings. The AA workings are directly affected by the investors' behavior, quite simply more investors wanting withdrawals than deposits for a period and that was always clearly stated and understood. This is investor behavior due to the situation, not AC changes. This behavior is, however, not surprising given the shock everyone got a few months ago but it is now diminishing again. We are not a bank account, you are invested in illiquid loans and always have been and need to hold to term unless there is enough buyer demand to buy off you early, which there always has been till March and will be again in the future we trust. We will continue to seek to create new solutions to a very difficult global problem and will not leave our AA investors to the mercy of the current situation, fail to make improvements and just move off to other things as you suggest. We could easily make decisions that just put the AAs into a 5 year run off or so and move on. It is far harder and painful and costly to do the right thing and that is what we are doing. Why are these astounding claims
- I was told a number of times over the phone there was never any problems with getting money out and could not see any problems in the future, even Feb this year
- Where did it say in the T&Cs AC could make changes to create an SM in AAs?
Where did AC state in the event of a lockdown large investors would be disadvantaged? Where did AC state most of the capital repayments would be used to fund promises that AC made to future tranches with money AC does not have? Where did AC state that around the time of the AA SM opening AC would create a new MLA loans on more favourable terms in competition to AA SM?
So please tell me why these are astounding claims, investors behaviour lead to the lock but made worse as AC did not carry a large enough liquidity buffer but investors are responsible for the changes AC have made since the lockdown.
So you lock investors in not knowing how much they may get back of their money and when this may happen, reduce interest rates to investors, use investors money against their wishes to fore fill promises AC made in future loan tranhes and talk about painful and costly to do the right thing.
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ashtondav
Member of DD Central
Posts: 1,814
Likes: 1,092
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Post by ashtondav on Jun 25, 2020 11:17:01 GMT
Oh dear, I don’t think you quite get it.
There is a global, lethal pandemic.
many workers are furloughed receiving 80% pay. Many of them will become unemployed. We are in the worst recession for 300 years.
Companies that have given clear guidance on dividends have slashed or eliminated them.
Airlines can’t fly and can’t afford to refund customers.
The government is effectively subsidising many businesses.
Do you seriously think it unreasonable that a company takes all action necessary to balance the needs of its customers, employeees and investors? I’m afraid we’re all going to lose during this pandemic. Of course companies should do whatever necessary to survive.
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dave4
Member of DD Central
Cynical is a hobby not a lifestyle
Posts: 1,056
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Post by dave4 on Jun 25, 2020 11:21:42 GMT
As a lender in all accounts, i feel a little more communication from assetz to its members would be beneficial and appreciated. Finding news secondhand from tabloid or interviews is not ideal. So is having to defend or explain actions on a forum, where in some situations a well informed release of info to assetz lenders via e mail or on the platform would have been prudent. We can and always will chew the fat / pick fault ect between ourselves on forums. Your input is always welcome stewart or any assets team.
I do understand that this is a financially new vista for everyone, and assetz are doing what they see as prudent, but as a lender i could easily start to feel like a cash cow. Well timed and informative information directly to us lenders before or VERY soon after public platforms would be appreciated.
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blender
Member of DD Central
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Post by blender on Jun 25, 2020 11:27:05 GMT
•Where did it say in the T&Cs AC could make changes to create an SM in AAs?
Where did it say they would never allow you to transfer your AA holding to another investor?
That which is not prohibited can be done.
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SteveT
Member of DD Central
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Post by SteveT on Jun 25, 2020 12:25:04 GMT
•Where did it say in the T&Cs AC could make changes to create an SM in AAs?
Where did it say they would never allow you to transfer your AA holding to another investor?
That which is not prohibited can be done. Indeed. In fact, the T&Cs clearly state that Assetz are permitted to change the T&Cs at their total discretion, which lenders all agreed to when opening their accounts. No use agreeing to this when times are good and then bleating about it retrospectively. Assetz have a tough challenge balancing the needs and issues of both lenders and borrowers, and are doing a decent job of it IMO.
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Post by Ace on Jun 25, 2020 12:41:44 GMT
Thanks for an interesting and illuminating debate all. Today's posts here have helped me gain a much better understanding of all sides of the arguments, much more so than the past 3 months ramblings (especially mine). And a special thanks to Stuart for engaging. It really does help enormously. I don't always agree with AC's decisions, but they are much easier to swallow when the thinking is explained. On balance I did feel it was a mistake to move to a flat rate distribution from the AAs and can understand large lenders annoyance, so I do feel that the move back to pro rata is more equitable.
I totally agree with the poster that was asking for more transparency. I don't feel qualified to add to the debate about what should and should not be allowed under the Ts&Cs. I mostly invest in the MLA, and my own DD tells me that the majority of my loans do have sufficiently solid security. I have a smallish holding in the AAs and trust that AC will plot a suitable course through the current turmoil. I didn't do any DD on the AA loans, I simply trusted AC on the back of my MLA DD. I would personalty be happy to help others exit by purchasing via the AA SM at a reasonable discount with new money.
Thanks all.
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Post by stuartassetzcapital on Jun 25, 2020 12:51:09 GMT
Quite astounding claims and they cannot be left to mislead others. What you state is the opposite of our website risk warnings. The AA workings are directly affected by the investors' behavior, quite simply more investors wanting withdrawals than deposits for a period and that was always clearly stated and understood. This is investor behavior due to the situation, not AC changes. This behavior is, however, not surprising given the shock everyone got a few months ago but it is now diminishing again. We are not a bank account, you are invested in illiquid loans and always have been and need to hold to term unless there is enough buyer demand to buy off you early, which there always has been till March and will be again in the future we trust. We will continue to seek to create new solutions to a very difficult global problem and will not leave our AA investors to the mercy of the current situation, fail to make improvements and just move off to other things as you suggest. We could easily make decisions that just put the AAs into a 5 year run off or so and move on. It is far harder and painful and costly to do the right thing and that is what we are doing. Why are these astounding claims
- I was told a number of times over the phone there was never any problems with getting money out and could not see any problems in the future, even Feb this year
- Where did it say in the T&Cs AC could make changes to create an SM in AAs?
Where did AC state in the event of a lockdown large investors would be disadvantaged? Where did AC state most of the capital repayments would be used to fund promises that AC made to future tranches with money AC does not have? Where did AC state that around the time of the AA SM opening AC would create a new MLA loans on more favourable terms in competition to AA SM?
So please tell me why these are astounding claims, investors behaviour lead to the lock but made worse as AC did not carry a large enough liquidity buffer but investors are responsible for the changes AC have made since the lockdown.
So you lock investors in not knowing how much they may get back of their money and when this may happen, reduce interest rates to investors and talk about painful and costly to do the right thing.
Answers below : I was told a number of times over the phone there was never any problems with getting money out and could not see any problems in the future, even Feb this year - Sounds like a straight answer to a straight question at the time yes, if that is what was asked and the information provided, and I'm sure you don't expect our lender desk to anticipate the economic impact of a global pandemic ahead of all the experts and our government. That doesn't change the clear terms of the accounts nor change that past performance doesn't indicate the future with certainty. Nonetheless, our Normal Market Conditions disclosure is directly applicable to the current circumstances. Where did it say in the T&Cs AC could make changes to create an SM in AAs? - It doesn't and doesn't need to - this is a new feature that is similar to the existing facility in the MLA and is intended to increase the options available to those wishing to release some of their funds as quickly as possible. Its an entirely optional service to use, existing withdrawals will be at par only so no discount. You are at liberty to just run down the account and await renewed par value liquidity, or if you need an exit now then you can consider offering a discount representing some of the recent interest earned perhaps. It is nothing more than a marketplace to further help investors buy and sell as the account terms state is the principal exit. Where did AC state in the event of a lockdown large investors would be disadvantaged? - this is only true if you are comparing to another potential new features we could have written that would have benefited you more than the one that was implemented. Most people would have received nothing if we had left the accounts running as before and that likely includes yourself. Where did AC state most of the capital repayments would be used to fund promises that AC made to future tranches with money AC does not have? - in the terms of the account it states that all investment in the account is automatic and that applies to new lending and any loans with outstanding future funding that has already been committed to by lenders under the account terms. All the cash required was always forecast to be available. As stated above we could look at cancelling those loans but the outcome for investors would be interesting for such a rash move and we therefore do not contemplate changing the terms of the account for that purpose. Where did AC state that around the time of the AA SM opening AC would create a new MLA loans on more favourable terms in competition to AA SM? - We aren't making that decision - we are a lender and market forces on a P2P platform can influence outcomes - if investors want to lend, and they do, and borrowers want to borrow, and they do, then our role is to facilitate that. Clearly cycles will influence interest rates. At some point participating in new lending on higher rates within the AA could bolster rates and also the provision fund and aid liquidity. That will be a decision to make at some point potentially. MLA lenders are different lenders to those in the Access Accounts as already stated. There will always be some other views but we must and do think of treating investors as a whole fairly. I hope this helps.
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ian
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Post by ian on Jun 25, 2020 13:15:04 GMT
Firstly these are investors funds which they are entitled to have access to at the earliest opportunity. Secondly you completely ignore the obvious supply & demand equation. Give borrowers access to tranche funding however; clearly as the landscape has changed for lenders (reduced rates for an inferior product) the landscape has changed for borrowers. As I alluded to a 180 day /365 day account paying premium interest which is funded by those borrowers, who need access to tranche funding. This funding should command which a premium rate? It’s simple supply and demand. Assetz are charging us lenders and borrowers additional fees why shouldn’t lenders be able to command a premium interest rate? Without creating new accounts that is possible in the new MLA lending process and under review. Creating more accounts is reversing the simplification trend and not ideal as complexity of choice reduces investment which isn't good for existing investors. The MLA will just create a liquidity race to the bottom. What simplification trend? What is simple about Instant access / 30 day accounts / 90 day accounts that pay 5.67 once a week if your name begins with an A or your Stuart Laws cousin ! We should be paid at minimum a fixed % of all capital redeemed. Observation AC ARE VERY GOOD AT FUNDING YOUR PROMISES TO BORROWERS with our money. But fail to reward lenders for their forebearance.
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cb25
Posts: 3,528
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Post by cb25 on Jun 25, 2020 13:29:18 GMT
Without creating new accounts that is possible in the new MLA lending process and under review. Creating more accounts is reversing the simplification trend and not ideal as complexity of choice reduces investment which isn't good for existing investors. The MLA will just create a liquidity race to the bottom. How?
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