zlb
Member of DD Central
Posts: 1,422
Likes: 333
|
Post by zlb on Aug 5, 2020 11:58:12 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.
Yeah - I think my 'pay out as a bonus if there is one' idea could be applicable to P2P as a whole. Even more like gambling though - if you win, you really win, if you lose, you really lose. Might not pass the FCA regs. Maybe it would make it not FCA compliant. I don't think a non-fscs compliant platform could offer it unless they were a particularly shielded/guarded one like LP - but they might use excess for join up bonuses.
|
|
aju
Member of DD Central
Posts: 3,500 
Likes: 924
|
Post by aju on Aug 5, 2020 14:03:14 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?
You probably won't get a response from Zopa on this platform and then not soon either, if you want them to comment or better ask them how long "wait and see" is you would need to send them an eMail and ask them direct questions as to what may be happening. They have not suspended the the SG as such, I think we had some payments last month but they would not have been in "Arrangement" for Covid issues ( Can't remember the tech name other than its a kind of temporary forbearance) In the last few days Zopa have started to split the "Arrangement" status's that were for Covid from the day to day ones with a new field in the Loanbook csv's online. The new field is not in the online loanbook screens but there is a way to see some things byt using the search term "yes deferred" its not conclusive as I haven't checked. With the new field in the CSV's one can see where covid "forbearance" shows up and also the split SG and non SG items. I think others have mentioned in many places on here that SG across P2P companies are not guarantees in any of the companies whatever they may be calling it. We have quite a number of Arrangements in our Zopa products many of which are potentially covid causes but with the new covid field one can see which ones may be temporary in a covid holding pattern for want of a better term. When/if any that are safeguarded are deemed to be no longer in danger i.e they are back at work and can restart payments then I guess they will be unmarked as covid (FALSE in new field) and be subjected to any SG repayments if they fail later. You must bear in mid though that if the SG runs out before the SG loans are cleared then they will just not be paid from the SG (its empty) and will go into the default mode and dealt with accordingly as if not SG covered. None of what I have said above is any indication of the current state of the Zopa SG.
|
|
|
|
Post by fuzzyiceberg on Aug 5, 2020 19:26:13 GMT
Zopa has paused all safeguard payments. Currently there is £0.2m in the safeguard fund and £45.2m of safeguard loans. So it is easy to see it won't take much of an increase above normal defaults to overwhelm the fund. Of course many of those loans are quite old now, since safeguard has been gone for nearly 3 years - but coronavirus may well impact on what were otherwise sound borrowers finances, so Zopa's caution is understandable. Personally I am working on the basis of no further payouts, and will take anything if and when it comes as a bonus.
|
|
aju
Member of DD Central
Posts: 3,500
Likes: 924
|
Post by aju on Aug 5, 2020 22:38:47 GMT
Zopa has paused all safeguard payments. Currently there is £0.2m in the safeguard fund and £45.2m of safeguard loans. So it is easy to see it won't take much of an increase above normal defaults to overwhelm the fund. Of course many of those loans are quite old now, since safeguard has been gone for nearly 3 years - but corona virus may well impact on what were otherwise sound borrowers finances, so Zopa's caution is understandable. Personally I am working on the basis of no further payouts, and will take anything if and when it comes as a bonus. We had loans with SG payment closures right up till the end of May but since then no loans have closed out with SG payments. Like you I never assumed that SG will cover my loans but rather hoped they might hold up. I might add that whilst there was someone with Sg's in default none of ours so far are marked as "Defaults" so I'm assuming that was an error by RS.
|
|
benaj
Member of DD Central
N/A
Posts: 5,591
Likes: 1,735
|
Post by benaj on Aug 5, 2020 23:12:06 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.
Tim Levene thinks so.
|
|
