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Post by camraid on Sept 10, 2020 9:48:38 GMT
I am looking at investing in the P2P business loan market.
The returns on the face of it seem good. I can see that there is skill in choosing the right platform and where allowed the right opportunity but the bit that scares me is fraud.
I accept that it happens but there is virtually no chat about it. On an Archover discussion there was chat about a potential fraud that had hit both Archover and Assetz Capital.
Was it avoidable? Could hit happen again? Was it sizeable? Why the secrecy around these problems.
Fraud to me seems to be the elephant in the room. The variable that we struggle to predict.
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TitoPuente
Member of DD Central
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Post by TitoPuente on Sept 10, 2020 9:56:28 GMT
[This is not AC specific. Can it be moved to the general area? The AC board is already crowded these days to add more noise]
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Post by camraid on Sept 10, 2020 10:09:33 GMT
Perhaps camraid could also enlighten us on his/her funding solution affiliations. Yes of course. I work for a business finance brokerage and I am guessing the admins have picked it up from my e-mail address. I work in the business finance market but not really in the loan market. I have had dealings with some P2P lenders. I thought my knowledge of business finance would lend itself to investing in P2P. I have tried the stock exchange looking at growth shares with limited success. I then opted for a blue chip approach hoping for dividends which have collapsed. I am now seeking returns elsewhere and arrived at P2P. In the main I suspect opportunities are well vetted. My concerns are: - the ability to choose which loans to invest in (I am not sure about auto allocation albeit it offers diversity) - the level of communication about defaults and what constitutes a default versus a bad debt. - fraud. This is something we can't really control. However, the lack of communication in this area seems limited or highly confidential. It doesn't seem fair to new investors.
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cb25
Posts: 3,528
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Post by cb25 on Sept 10, 2020 10:33:48 GMT
Perhaps camraid could also enlighten us on his/her funding solution affiliations. Yes of course. I work for a business finance brokerage and I am guessing the admins have picked it up from my e-mail address. I work in the business finance market but not really in the loan market. I have had dealings with some P2P lenders. I thought my knowledge of business finance would lend itself to investing in P2P. I have tried the stock exchange looking at growth shares with limited success. I then opted for a blue chip approach hoping for dividends which have collapsed. I am now seeking returns elsewhere and arrived at P2P. In the main I suspect opportunities are well vetted. My concerns are: - the ability to choose which loans to invest in (I am not sure about auto allocation albeit it offers diversity) - the level of communication about defaults and what constitutes a default versus a bad debt. - fraud. This is something we can't really control. However, the lack of communication in this area seems limited or highly confidential. It doesn't seem fair to new investors. Does the business you work for (http://www.fundingsolutions.co.uk/?) publish data on how much fraud it has suffered from? For any business, I think it would be likely to put off potential new customers/investors.
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Post by davee39 on Sept 10, 2020 10:59:09 GMT
Perhaps this discussion could be moved to a special Spam thread for businesses trying to promote themselves.
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alanh
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Post by alanh on Sept 10, 2020 11:13:43 GMT
Perhaps this discussion could be moved to a special Spam thread for businesses trying to promote themselves. I'm not entirely sure he is doing a particularly good job of promoting it if turning up at the p2p party about 8 years too late is considered to be a good opportunity
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Post by camraid on Sept 10, 2020 12:34:50 GMT
Perhaps this discussion could be moved to a special Spam thread for businesses trying to promote themselves. I'm not entirely sure he is doing a particularly good job of promoting it if turning up at the p2p party about 8 years too late is considered to be a good opportunity What a strange response. By all means move the thread but how would I be looking to promote myself or my organisation by posting a question on here? I think you will find it was the admins that decided that my organisation should be disclosed. I guess they thought it may have links to P2P. I am trying to find reasonable returns having fallen short in the stock markets. I thought P2P may be a good opportunity. As you say perhaps the good times have indeed gone. I am however somewhat disappointed by the responses on here. I did spend a lot of time reading as a guest and thought I would participate ahead of dipping my toe in actual investing.
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Post by stuartassetzcapital on Sept 10, 2020 12:53:31 GMT
camraid I think you will find that one loan is an old rare exception to our exclusively property backed lending only for the last 3-4 years. Fraud is quite hard with property backed lending versus unsecured/ debenture led lending etc. We don't do that latter. That probably answers your question. I don't pass comment on the loan itself bar that as it is in recovery and we don't comment on those bar official updates.
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Post by camraid on Sept 10, 2020 14:37:19 GMT
camraid in no particular order: - if the responses you feel you’ve got on here stop you investing in P2P you’ve probably been done a huge favour. - if you’re still serious about investing, my personal approach would be to just get in and dip a toe. BUT ONLY with beer money you are happy to risk never seeing again. If you get more comfortable that you know at least as much as the next borrower, lender, platform, intermediary and still fancy the risks you might then consider adding a bit more funds. - my concern with your initial posts were that it wasn’t clear your interests were wholly and solely aligned with regular lenders. - it’s dangerous to trust any one on these forums. Entities I don’t trust on here include platforms, intermediaries, borrowers, lenders, posters AND myself! - to bring everything full circle those I might trust least are intermediaries (introducers, credit brokers, invoice factorers, trade export and import finance brokers, etc). The individual behind the bad debt in common across AC and AO is an intermediary type. It’s just luck that he’s only blotted two platforms: he was on a third one originally, I believe. [Disclosure: I am invested on AC through the MLA] Dees, thanks for your responses. The responses I got just felt a bit unusual. They have not put me off. I am unsure if I will invest but I will keep looking. I would only invest a small part of my portfolio (that makes it sound posh - it's not!!). My concern is for what I want it may take considerable time to manage for very little return. Regarding your concerns about my interests, I am unsure what you mean by regular lenders? I was trying to establish whether bad debts and in particular bad debts because of fraud were a) common and b) sizeable. I think you have trust issues given your next comment!! But I appreciate your honesty!! :-)  And last but not least, I perhaps tick every box!! Again, thanks for your honesty. I guess there are good and bad everywhere.
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Post by camraid on Sept 10, 2020 14:39:01 GMT
camraid I think you will find that one loan is an old rare exception to our exclusively property backed lending only for the last 3-4 years. Fraud is quite hard with property backed lending versus unsecured/ debenture led lending etc. We don't do that latter. That probably answers your question. I don't pass comment on the loan itself bar that as it is in recovery and we don't comment on those bar official updates. I saw that you were property backed only which is reassuring.
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Greenwood2
Member of DD Central
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Post by Greenwood2 on Sept 10, 2020 16:28:07 GMT
camraid in no particular order: - if the responses you feel you’ve got on here stop you investing in P2P you’ve probably been done a huge favour. - if you’re still serious about investing, my personal approach would be to just get in and dip a toe. BUT ONLY with beer money you are happy to risk never seeing again. If you get more comfortable that you know at least as much as the next borrower, lender, platform, intermediary and still fancy the risks you might then consider adding a bit more funds. - my concern with your initial posts were that it wasn’t clear your interests were wholly and solely aligned with regular lenders. - it’s dangerous to trust any one on these forums. Entities I don’t trust on here include platforms, intermediaries, borrowers, lenders, posters AND myself! - to bring everything full circle those I might trust least are intermediaries (introducers, credit brokers, invoice factorers, trade export and import finance brokers, etc). The individual behind the bad debt in common across AC and AO is an intermediary type. It’s just luck that he’s only blotted two platforms: he was on a third one originally, I believe. [Disclosure: I am invested on AC through the MLA] Dees, thanks for your responses. The responses I got just felt a bit unusual. They have not put me off. I am unsure if I will invest but I will keep looking. I would only invest a small part of my portfolio (that makes it sound posh - it's not!!). My concern is for what I want it may take considerable time to manage for very little return. Regarding your concerns about my interests, I am unsure what you mean by regular lenders? I was trying to establish whether bad debts and in particular bad debts because of fraud were a) common and b) sizeable. I think you have trust issues given your next comment!! But I appreciate your honesty!! :-) And last but not least, I perhaps tick every box!! Again, thanks for your honesty. I guess there are good and bad everywhere. Most platforms publish statistics about historic and sometimes projected bad debt, be wary of 'young' platforms with zero or low bad debt, it takes sometime for problems to become apparent. Fraud is usually very difficult to identify, was it fraud, incompetence or stupidity. It doesn't really change anything for lenders it's all part of the bad debt, unless a platform takes responsibility for it as fraud and pays lenders back, which has happened a few times. The size of your exposure to fraud is the same as your exposure to any bad debt and equal to the amount you're willing to put in any one loan, set a limit or be very careful.
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scooter
Member of DD Central
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Post by scooter on Sept 10, 2020 17:57:42 GMT
Hi, I don't care who you represent or otherwise... You are right that fraud is little mentioned in relation to P2p.
Since I started investing in P2p I have suffered numerous 'frauds'. My problem is that I am essentially honest and would never think about not paying my debts. I therefore had little imagination as to the scams/stunts/frauds borrowers will commit. On top of the dodgy borrowers you need to add the inept platforms. Real genuine "I've tried everything to pay back my loans and I've failed and I will sell my house to pay back what I can" are the least of lenders worries.
I would say the most popular frauds are:
1) lying on the application form. Platforms take no responsibility for the information they are given even when it didn't match with the already filed accounts. (C2F, FC)
2) which brings me on to filing dodgy accounts to get the loan and then refilling the real figures once they have received the loan. (C2F, FC)
3) applying for a loan they have no intention of paying back. Immediately putting the company into liquidation (FC)
4) did I mention lying on the application form... Applying for a loan knowing you are about to be struck off as a director. (FC)
5) applying for a loan in another reputable company's name and running off with the proceeds. (C2F)
6) adding leased assets to your accounts to make your account look better, but they are worthless to investors in P2p.
Add to these platform incompetence.
7) allowing borrowers to lie endlessly about entering into a payment plan but never actually doing so. (FC)
8) putting your company into voluntary windup claiming no debts and the P2P platform not noticing and you not getting a penny (FC)
9) not verifying the information on the application forms (FC, C2F)
10) platforms lying to investors about what they have or haven't done to collect dedts. (FC)
11) platforms changing T&Cs contrary to anything an investor would expect when signing the contract (before covid) (FC) Don't read the T&Cs, simply accept that P2p platforms will do exactly what they like when they like in their own best interests and the FO and FCA will let them.
12) misleading investors about the level of bad debt they suffer because there are no rules on how and when to present them (C2F)
13) failing to collect recovery payments even when the accounts clearly show that a company is making more money than when they took out the loan (FC)
14) allowing borrowers who have lied and misled and stopped paying really early into a contract to have extended time at lower payments (longer than you will live) without taking any extra security for your ancesters....
I do invest in AC and LC and Proplend. The rest I am running down, literally.
The worst you can do with this information is go and get yourself some loans I guess......
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Post by camraid on Sept 11, 2020 7:18:19 GMT
Dees, thanks for your responses. The responses I got just felt a bit unusual. They have not put me off. I am unsure if I will invest but I will keep looking. I would only invest a small part of my portfolio (that makes it sound posh - it's not!!). My concern is for what I want it may take considerable time to manage for very little return. Regarding your concerns about my interests, I am unsure what you mean by regular lenders? I was trying to establish whether bad debts and in particular bad debts because of fraud were a) common and b) sizeable. I think you have trust issues given your next comment!! But I appreciate your honesty!! :-) And last but not least, I perhaps tick every box!! Again, thanks for your honesty. I guess there are good and bad everywhere. Most platforms publish statistics about historic and sometimes projected bad debt, be wary of 'young' platforms with zero or low bad debt, it takes sometime for problems to become apparent. Fraud is usually very difficult to identify, was it fraud, incompetence or stupidity. It doesn't really change anything for lenders it's all part of the bad debt, unless a platform takes responsibility for it as fraud and pays lenders back, which has happened a few times. The size of your exposure to fraud is the same as your exposure to any bad debt and equal to the amount you're willing to put in any one loan, set a limit or be very careful. Thanks. That is good feedback.
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Post by camraid on Sept 11, 2020 7:21:16 GMT
Hi, I don't care who you represent or otherwise... You are right that fraud is little mentioned in relation to P2p. Since I started investing in P2p I have suffered numerous 'frauds'. My problem is that I am essentially honest and would never think about not paying my debts. I therefore had little imagination as to the scams/stunts/frauds borrowers will commit. On top of the dodgy borrowers you need to add the inept platforms. Real genuine "I've tried everything to pay back my loans and I've failed and I will sell my house to pay back what I can" are the least of lenders worries. I would say the most popular frauds are: 1) lying on the application form. Platforms take no responsibility for the information they are given even when it didn't match with the already filed accounts. (C2F, FC) 2) which brings me on to filing dodgy accounts to get the loan and then refilling the real figures once they have received the loan. (C2F, FC) 3) applying for a loan they have no intention of paying back. Immediately putting the company into liquidation (FC) 4) did I mention lying on the application form... Applying for a loan knowing you are about to be struck off as a director. (FC) 5) applying for a loan in another reputable company's name and running off with the proceeds. (C2F) 6) adding leased assets to your accounts to make your account look better, but they are worthless to investors in P2p. Add to these platform incompetence. 7) allowing borrowers to lie endlessly about entering into a payment plan but never actually doing so. (FC) 8) putting your company into voluntary windup claiming no debts and the P2P platform not noticing and you not getting a penny (FC) 9) not verifying the information on the application forms (FC, C2F) 10) platforms lying to investors about what they have or haven't done to collect dedts. (FC) 11) platforms changing T&Cs contrary to anything an investor would expect when signing the contract (before covid) (FC) Don't read the T&Cs, simply accept that P2p platforms will do exactly what they like when they like in their own best interests and the FO and FCA will let them. 12) misleading investors about the level of bad debt they suffer because there are no rules on how and when to present them (C2F) 13) failing to collect recovery payments even when the accounts clearly show that a company is making more money than when they took out the loan (FC) 14) allowing borrowers who have lied and misled and stopped paying really early into a contract to have extended time at lower payments (longer than you will live) without taking any extra security for your ancesters.... I do invest in AC and LC and Proplend. The rest I am running down, literally. The worst you can do with this information is go and get yourself some loans I guess...... Thanks. That is really insightful and worrying at the same time. I would imagine these cases are the minority relative to the amount of loans that the lenders you mention provide although it is still worrying. I guess it is a danger of 'arms length' lending when compared to how banks used to lend. What I was looking for was a way to earn a steady 6-8% on investments that was relatively risk free. I am concerned that this perhaps isn't the case with p2P.
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Post by Ace on Sept 11, 2020 8:11:52 GMT
The critical part of your requirement is the use of the word "relatively". Obviously, nothing that gives a 6-8% return is risk free.
Have you looked at CrowdProperty, they might fit your requirements. All loans are secured on first charge property and returns are likely to be in your required range. They've been going for about 6 years now without losses 'so far'. They seem to have sailed through the current crisis unscathed, again 'so far.
Kuflink might also be worth a look on a similar vein. I invest in both, but personally rank CP higher.
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