coogaruk
Hello everyone! Anyone remember me?
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Post by coogaruk on Jul 29, 2020 17:33:32 GMT
I for one think they might well be.
After years of dissing them as their P2P Lending offer became less and less like P2P Lending, not to mention several disasters in the making which I had predicted (such as Listings) until so fed up I began winding down towards the end of 2017, I actually think they are currently doing thing exactly (well almost maybe) the right thing, at least from a business strategy point of view.
By swallowing the "If you can't beat 'em, join 'em" pill & ticking the Banking Licence Box (both sensible if not shrewd moves in my view) I reckon they have managed to preserve a long-term future.
Of course it's not really Peer to Peer Lending anymore but then I think that ship has well and truly sailed. There's no profit in it, you see. Never has and probably never will be.
Their customer base might not agree with me of course and that will be the ultimate decider.
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johni
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Post by johni on Jul 29, 2020 22:07:29 GMT
No disagree as a p2p lender returns are poor, defaults growing by the day, exit fees change without notice. For me Zopa treating lenders like a dodgy second hand car dealer
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Post by aidanw on Jul 29, 2020 22:18:17 GMT
Zopa have lost all credibility as a p2p lender. The lack of comments on here over the past month speaks volumes. Everyone is running down their p2p investments with Zopa, even arbitrarily privileged early adopters.
Not so much back on track but on a completely different track that no one signed up for.
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Greenwood2
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Post by Greenwood2 on Jul 30, 2020 5:52:27 GMT
Zopa have lost all credibility as a p2p lender. The lack of comments on here over the past month speaks volumes. Everyone is running down their p2p investments with Zopa, even arbitrarily privileged early adopters.Not so much back on track but on a completely different track that no one signed up for. I'm not running down Zopa (unlike most other platforms), I'm still happy with the rates on Zopa losses are included in those rates, and there is no PF waiting to implode. You only pay the exit fees if you sell, unfortunately Zopa are now charging higher rates to borrowers due to increased risk, which means the levelling fee that allows you to sell is higher than it was before Covid (no one would buy your old lower rate loans otherwise). At least you can sell if you want to, unlike several other platforms. (Zopa selling fees are explained in the T&Cs).
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Post by fuzzyiceberg on Jul 30, 2020 7:36:06 GMT
I think Zopa are at the start of a strategic change that will see the end of their p2p business as they gradually absorb all lending into their banking operation. This has already started with all loans being initially funded by the bank.
And actually I believe P2P was profitable (for investors) in the early years, but inevitably competition has eroded margins and the era of low interest rates has been the death knell. The margin available is effectively set by what the banks make on their lending and these days that isn't enough to allow Zopa to take a profitable cut and leave a decent excess to pass on to investors.
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aju
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Post by aju on Jul 30, 2020 12:02:53 GMT
Well for me this month is the worst, having made some sales - not all - this month is the worst on our records so far in one of our accounts we have defaulted nearly all of the last 2 months interest in one month!. To be fair we are selling all out of ISA's. Our invest are still relatively ok but to be fair they are much smaller and mostly covered by SG.
That said we should be expecting this sort of thing as we have stopped relending and have sold a considerable amount that is no longer providing the interest to cover these sort of events. That's not a covid issue just a fact of selling loans and the delays on the sales - its much slower since they changed the queues to shared ones rather than FIFO ones.
There's also the loss on MRA from the sales too, but, we still have a lot of returns before the capital starts being hit - ok it will be interesting when we are finished and we work out the XIRR for the whole deal.
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Greenwood2
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Post by Greenwood2 on Jul 30, 2020 12:20:51 GMT
Well for me this month is the worst, having made some sales - not all - this month is the worst on our records so far in one of our accounts we have defaulted nearly all of the last 2 months interest in one month!. To be fair we are selling all out of ISA's. Our invest are still relatively ok but to be fair they are much smaller and mostly covered by SG. That said we should be expecting this sort of thing as we have stopped relending and have sold a considerable amount that is no longer providing the interest to cover these sort of events. That's not a covid issue just a fact of selling loans and the delays on the sales - its much slower since they changed the queues to shared ones rather than FIFO ones. There's also the loss on MRA from the sales too, but, we still have a lot of returns before the capital starts being hit - ok it will be interesting when we are finished and we work out the XIRR for the whole deal. Looks like quite a good month for me, defaults at about normal levels so possibly the higher lending rates starting to have some impact, although that may be short lived as the defaults in the newer loans start.
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aju
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Post by aju on Jul 30, 2020 13:33:02 GMT
Well for me this month is the worst, having made some sales - not all - this month is the worst on our records so far in one of our accounts we have defaulted nearly all of the last 2 months interest in one month!. To be fair we are selling all out of ISA's. Our invest are still relatively ok but to be fair they are much smaller and mostly covered by SG. That said we should be expecting this sort of thing as we have stopped relending and have sold a considerable amount that is no longer providing the interest to cover these sort of events. That's not a covid issue just a fact of selling loans and the delays on the sales - its much slower since they changed the queues to shared ones rather than FIFO ones. There's also the loss on MRA from the sales too, but, we still have a lot of returns before the capital starts being hit - ok it will be interesting when we are finished and we work out the XIRR for the whole deal. Looks like quite a good month for me, defaults at about normal levels so possibly the higher lending rates starting to have some impact, although that may be short lived as the defaults in the newer loans start. Yes, give it four months at least, in our case I think its to be expected as we do have a lot less funds and by definition that mean we have spikes where the number of defaults can easily outweigh the interest to cover it.
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Post by gsmith on Jul 31, 2020 18:27:56 GMT
I have 2 accounts with Zopa - an ISA and a Non-ISA. The latter is now very small, it has been reducing for many years.
The crucial point is that because the non-ISA is an old investment it is 100% Safeguard protected. During July it lost 2% of the capital value even though it is supposedly 100% Safeguard protected. The loss was equivalent to the previous 6 months interest even though it is running down.
I read the corporate comms about 'wait and see' on Covid defaults. What I had not understood from that is that they have effectively suspended the provision fund and they now write off any slow paying/non-paying Safeguard loans against Lender's capital. This is what I take from the loss on my July statement. Effectively Safeguard is now meaningless. Any response from Zopa?
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Greenwood2
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Post by Greenwood2 on Jul 31, 2020 19:35:24 GMT
I have 2 accounts with Zopa - an ISA and a Non-ISA. The latter is now very small, it has been reducing for many years.
The crucial point is that because the non-ISA is an old investment it is 100% Safeguard protected. During July it lost 2% of the capital value even though it is supposedly 100% Safeguard protected. The loss was equivalent to the previous 6 months interest even though it is running down.
I read the corporate comms about 'wait and see' on Covid defaults. What I had not understood from that is that they have effectively suspended the provision fund and they now write off any slow paying/non-paying Safeguard loans against Lender's capital. This is what I take from the loss on my July statement. Effectively Safeguard is now meaningless. Any response from Zopa?
Safeguard does not mean you are guaranteed to get paid back, the PF fund may not have enough funds.
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one21
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Post by one21 on Jul 31, 2020 22:08:10 GMT
I have 2 accounts with Zopa - an ISA and a Non-ISA. The latter is now very small, it has been reducing for many years.
The crucial point is that because the non-ISA is an old investment it is 100% Safeguard protected. During July it lost 2% of the capital value even though it is supposedly 100% Safeguard protected. The loss was equivalent to the previous 6 months interest even though it is running down.
I read the corporate comms about 'wait and see' on Covid defaults. What I had not understood from that is that they have effectively suspended the provision fund and they now write off any slow paying/non-paying Safeguard loans against Lender's capital. This is what I take from the loss on my July statement. Effectively Safeguard is now meaningless. Any response from Zopa?
Hopefully Safeguard is just paused and is explained as follows:- "We've paused Safeguard pay-outs while we enact measures to support borrowers impacted by the Coronavirus. By offering payment freezes and reduced plans, we hope to get them back to full repayments when their situation normalises. For now, our collections team will work to make recoveries on your behalf for any Safeguard loans that do default."
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Post by fuzzyiceberg on Aug 2, 2020 9:27:00 GMT
There is still cash in the safeguard fund. What Zopa are not saying - or at least not making clear - is that they are clearly worried it wont be enough to pay out all Safeguarded loans that may default once borrower payment holidays end and the full impact of Covid is known on borrowers finances, people being made redundant etc. So I expect hey have suspended safeguard payouts until such time as they can assess whether there is enough to pay all claims, or if not will presumably operate some scale down method of payout that they think can be sustained eg 50p paid per £ loan or somesuch.
Interesting times.
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Greenwood2
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Post by Greenwood2 on Aug 3, 2020 7:28:13 GMT
Looks like Ratesetters are going down the same track. Zopa becoming a Bank and Ratesetters being bought by Metro Bank.
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zlb
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Post by zlb on Aug 4, 2020 11:27:23 GMT
Their savings rates - I am left concerned - it's hardly much better than high street for the long tie-in period. So they need a profit and to pay wages - but haven't they been doing that anyway? The % rates must reflect what the FSCS will permit - so the margin for default is very high? Based on the P2P rates, they are clearly a little more than 1.4%.
I think they could offer to pay out any higher than expected returns to 'savers' at certain points in the cycle - wouldn't that be more attractive? 'If we do well, everyone will get a boost'. Unless by being FSCS they have to be as dull as cardboard.
Plus I presume they aren't subject to the division between investment and savings arm that larger banks are? Rates for savings where they aren't subject to that rule have dropped still eg Marcus, but less than high street banks.
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69m
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Post by 69m on Aug 4, 2020 14:37:01 GMT
Their savings rates - I am left concerned - it's hardly much better than high street for the long tie-in period. So they need a profit and to pay wages - but haven't they been doing that anyway? The % rates must reflect what the FSCS will permit - so the margin for default is very high? Based on the P2P rates, they are clearly a little more than 1.4%. I think they could offer to pay out any higher than expected returns to 'savers' at certain points in the cycle - wouldn't that be more attractive? 'If we do well, everyone will get a boost'. Unless by being FSCS they have to be as dull as cardboard. Plus I presume they aren't subject to the division between investment and savings arm that larger banks are? Rates for savings where they aren't subject to that rule have dropped still eg Marcus, but less than high street banks. Regarding Zopa Bank's savings rates, I suspect that they've been set to get ZB to the top of the 'best buy' tables (but by the smallest amount possible). As a marketing strategy, it's probably cheaper and more effective than running a fancy launch campaign.
If my Zopa P2P account is a reliable indicator, then the bad debt levels are already very high and they're likely to worsen (in my opinion, the Projected Return figure shown on the P2P website is nonsense). Therefore, even with unspectacular savings rates, I'd be surprised if ZB made much of a profit (if any) in its first few years.
Higher than expected returns during the cycle could be paid out - but only as dividends to Zopa's shareholders, unfortunately.
Nevertheless, the concept of giving savers additional profit-related bonuses is attractive. Maybe a quasi co-operative business model is the future for P2P? Zopa won't be the company to try it, though.
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