beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
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Post by beagle on Sept 20, 2020 7:04:05 GMT
The point is being lost here. RS had three main types of lending, unsecured personal, secured property, and vehicle. It has now terminated new lending in one of these three areas and transferred all new lending to Metro. So the individual lenders now face a materially different risk profile. This is why I would argue that investors, in return for this change in risk profile brought on by the Metro deal, should be allowed to turn off all automatic reinvestment as we didn't sign up to lend solely to property and vehicle (particularly when vehicle has been a disaster with big write offs of the deal itself, and RS for the only time ever did make good individual lenders on some dud vehicle loans it acquired). The risk profile has been materially changed. I might be misreading this point and I'm not interested in reading the whole thread but every investor in Ratesetter has always been able to turn off automatic reinvestment, simply set your interest rate to 20%.
I'm not defending Ratesetter's recent behaviour and Metro Bank certainly doesn't make me feel my money is more likely to be returned with interest, they are just a long series of newsworthy cockups and terrible customer service.
ha what are you blaming the customer service team for....what action do you actually expect them to perform
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Post by diversifier on Sept 20, 2020 8:23:41 GMT
The point is being lost here. RS had three main types of lending, unsecured personal, secured property, and vehicle. It has now terminated new lending in one of these three areas and transferred all new lending to Metro. So the individual lenders now face a materially different risk profile. This is why I would argue that investors, in return for this change in risk profile brought on by the Metro deal, should be allowed to turn off all automatic reinvestment as we didn't sign up to lend solely to property and vehicle (particularly when vehicle has been a disaster with big write offs of the deal itself, and RS for the only time ever did make good individual lenders on some dud vehicle loans it acquired). The risk profile has been materially changed. I might be misreading this point and I'm not interested in reading the whole thread but every investor in Ratesetter has always been able to turn off automatic reinvestment, simply set your interest rate to 20%.
I'm not defending Ratesetter's recent behaviour and Metro Bank certainly doesn't make me feel my money is more likely to be returned with interest, they are just a long series of newsworthy cockups and terrible customer service.
There is no guarantee that the “clever rate trick” will continue to be supported. When that is stopped, it is simple forced reinvestment indefinitely, independent of the length of the underlying loans. For example, Metro can recalculate that the Interest Coverage Ratio is no longer sufficient to protect Interest, and therefore Capital only will be protected. Then, interest rate will be set to zero. Since zero multiplied by anything is still zero, all loans will then be equally reinvested irrespective of their “set” value. There are two other ways to do it too. As the level of voluntary reinvestment decreases over the next months, Metro will be forced to implement this or something very like it. Metro have a level of “lending commitments” for property development that they have simply no normal means to ensure that reinvestment will cover. They have explicitly stated they won’t do that lending themselves. *So, yes you will be forced to reinvest, unless you expect Metro to renege on contracts to property developers*. You can shout that it’s not legal if you like, but that is what will happen and individuals will have to decide what action to take at that time. The great unknown is the exact size of that “committed lending”. First signs are that it is not as large as feared. The weekly RYI level has shot up from £2.2m to about £3.7m. Metro do have every interest to cease everything not absolutely committed. They don’t *want* to get involved in battles not of their making. But that was a single step change, and overall reinvestment will decrease again from here by an average of £0.12m per week, as before. The Metro acquisition bought us about 3 months by taking on the consumer lending. At some point the RYI still hits zero - current estimate 30 weeks from now. The level of committed re-lending will also reduce over time, as developments complete. It’s a race between those two factors. But once the RYI hits zero, and it surely will, Metro simply have no room to maneuver. It’s also important to understand that the continued reduction in reinvestment rate is not a “negative view”, or an idea that “investors are losing confidence”. People who invested in APM never intended for it to be a lifelong investment. Typically, they invest for a year or two, then they move the money elsewhere. So it’s entirely normal that after six months, 25-40% have wanted their money back, which is the current measured value. We can expect that in the next six months, another 25-40% will want their money back and attempt to switch reinvestment off.
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gmd78
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Post by gmd78 on Sept 20, 2020 9:10:37 GMT
With a fair degree of self-interest, would those of us with relatively substantial outstanding monies owing to us on Access have been better off if RS had terminated all of their lending platforms and ring-fenced the outstanding capital owing to us? I take the view that RS should have done just that, with good reason. Would ring-fencing our capital have materially have affected Metro’s offer? I suggest not, they were solely interested in RS’s expertise in unsecured lending. How would RS have managed the technicalities of ring-fencing the outstanding capital owing to us is none of my concern. Does RS owe us any favours? Do they have a duty of care? In my view, yes. But why? Simply because, notwithstanding the investment risks to our capital was always clearly stated, the sell-out to Metro with all its ramifications was not of our making, the Metro sell-out “significantly” altered the risk factor. Who benefited from the Metro deal? None other than RS. Appearance has it that our borrowers have been treated well. Have lenders without whom there would be no borrowers, been treated equally well? Self-evidently, not. For those investors who kept the faith to the bitter end, a wet finger held to the prevailing wind, is a pointless gesture of ineffective futility. Needless to say, this post is directed not to seasoned investors, but primarily to those who mistakenly assumed that Access, as “financially” defined in English language dictionaries, Cambridge, in particular (and I quote) “as a type of an account that offers instant access to your money” and not the right or opportunity to gain a means of entry to a building. Quote :Ring fenced in what way? The outstanding funds are with borrowers. Or do you mean ring fenced out of the potential grasp of administrators in some way? : Unquote. The provision fund is misnamed, it isn’t a folksy Jon Boy USA style contribution to an Armageddon grocery list for the benefit of lender’s losses. It’s innovatively named financial poetry, the thought was there, but that’s where it ended. It’s meaningless, pay-outs to lenders for their losses are at the sole discretion of RS. In reality, RS have no obligation to pay us a single penny-farthing. By ring-fencing, I mean contributions to the provision fund in respect of unsecured loans should have been a compulsorily percentage-based amount - governed by a risk factor “well in excess” of that used by RS and above all, with lenders exclusively mentioned in dispatches as beneficiaries. I suggest, contractually phrased in that way, it would have diminished the queue of disenchanted investors and increased RS’s now depleted liquidity.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
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Post by beagle on Sept 20, 2020 9:39:23 GMT
Quote :Ring fenced in what way? The outstanding funds are with borrowers. Or do you mean ring fenced out of the potential grasp of administrators in some way? : Unquote. The provision fund is misnamed, it isn’t a folksy Jon Boy USA style contribution to an Armageddon grocery list for the benefit of lender’s losses. It’s innovatively named financial poetry, the thought was there, but that’s where it ended. It’s meaningless, pay-outs to lenders for their losses are at the sole discretion of RS. In reality, RS have no obligation to pay us a single penny-farthing. By ring-fencing, I mean contributions to the provision fund in respect of unsecured loans should have been a compulsorily percentage-based amount - governed by a risk factor “well in excess” of that used by RS and above all, with lenders exclusively mentioned in dispatches as beneficiaries. I suggest, contractually phrased in that way, it would have diminished the queue of disenchanted investors and increased RS’s now depleted liquidity. sorry but the provision fund has done it's job so far. no one has lost capital and this is due the fund. naturally RS has discretion as without discretion it is open to e.g. fraud.
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Greenwood2
Member of DD Central
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Post by Greenwood2 on Sept 20, 2020 9:42:27 GMT
I might be misreading this point and I'm not interested in reading the whole thread but every investor in Ratesetter has always been able to turn off automatic reinvestment, simply set your interest rate to 20%.
I'm not defending Ratesetter's recent behaviour and Metro Bank certainly doesn't make me feel my money is more likely to be returned with interest, they are just a long series of newsworthy cockups and terrible customer service.
For example, Metro can recalculate that the Interest Coverage Ratio is no longer sufficient to protect Interest, and therefore Capital only will be protected. Then, interest rate will be set to zero. Since zero multiplied by anything is still zero, all loans will then be equally reinvested irrespective of their “set” value. There are two other ways to do it too. As the level of voluntary reinvestment decreases over the next months, Metro will be forced to implement this or something very like it. Metro have a level of “lending commitments” for property development that they have simply no normal means to ensure that reinvestment will cover. They have explicitly stated they won’t do that lending themselves. *So, yes you will be forced to reinvest, unless you expect Metro to renege on contracts to property developers*. You can shout that it’s not legal if you like, but that is what will happen and individuals will have to decide what action to take at that time. The great unknown is the exact size of that “committed lending”. First signs are that it is not as large as feared. The weekly RYI level has shot up from £2.2m to about £3.7m. Metro do have every interest to cease everything not absolutely committed. They don’t *want* to get involved in battles not of their making. But that was a single step change, and overall reinvestment will decrease again from here by an average of £0.12m per week, as before. The Metro acquisition bought us about 3 months by taking on the consumer lending. At some point the RYI still hits zero - current estimate 30 weeks from now. The level of committed re-lending will also reduce over time, as developments complete. It’s a race between those two factors. But once the RYI hits zero, and it surely will, Metro simply have no room to maneuver. It’s also important to understand that the continued reduction in reinvestment rate is not a “negative view”, or an idea that “investors are losing confidence”. People who invested in APM never intended for it to be a lifelong investment. Typically, they invest for a year or two, then they move the money elsewhere. So it’s entirely normal that after six months, 25-40% have wanted their money back, which is the current measured value. We can expect that in the next six months, another 25-40% will want their money back and attempt to switch reinvestment off. It is not a 'clever trick' the T&Cs say you can re-invest at rates up to 5% above the 'going rate', so if RS set the 'going rate' to zero you would still be able to put your rate at 5%. If it was lent at that, but you got 0% due to an interest haircut, at least the 5% would have to go into the PF. I do not think RS can force you to reinvest, if you inform RS that you want to close your account you would have to wait for your loans to repay (if RYI was impossible) but I can't see how they could legally re-invest any of your returning funds. I'm sure there are ways Metro could help RS out If the lack of funds became dire, in theory at least any funds they had to put in would come back to them with interest.
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Greenwood2
Member of DD Central
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Post by Greenwood2 on Sept 20, 2020 9:48:26 GMT
sorry but the provision fund has done it's job so far. no one has lost capital and this is due the fund. naturally RS has discretion as without discretion it is open to e.g. fraud. The T&Cs say the PF will pay out as long as it has sufficient funds.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
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Post by beagle on Sept 20, 2020 9:52:06 GMT
sorry but the provision fund has done it's job so far. no one has lost capital and this is due the fund. naturally RS has discretion as without discretion it is open to e.g. fraud. The T&Cs say the PF will pay out as long as it has sufficient funds. also true. exactly discretion on funds and other things. RS would never bind themself anything otherwise
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gmd78
Posts: 57
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Post by gmd78 on Sept 20, 2020 10:10:44 GMT
RS have conveyed a false sense of security to lenders. They have been encouraged to think their money was more secure with a provision fund, the now much maligned catchy advertising slogan, “no one has ever lost a penny” has yet to be put to the test.
The provision fund is not insurance based; it most certainly does not provide investors with a guarantee that their losses will be reimbursed. Properly phrased and encapsulated in favour of investors, I am unable to see how it could be fraudulently used.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
Likes: 322
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Post by beagle on Sept 20, 2020 10:23:29 GMT
RS have conveyed a false sense of security to lenders. They have been encouraged to think their money was more secure with a provision fund, the now much maligned catchy advertising slogan, “no one has ever lost a penny” has yet to be put to the test. The provision fund is not insurance based; it most certainly does not provide investors with a guarantee that their losses will be reimbursed. Properly phrased and encapsulated in favour of investors, I am unable to see how it could be fraudulently used. No one has lost a penny so they can say that, it has and was put to the test in 2017. they also never suggest it a guarantee but a measure of hedging risk. if you want this ring fenced promise you need to open a bank account
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Greenwood2
Member of DD Central
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Post by Greenwood2 on Sept 20, 2020 10:39:56 GMT
Quote :Ring fenced in what way? The outstanding funds are with borrowers. Or do you mean ring fenced out of the potential grasp of administrators in some way? : Unquote. The provision fund is misnamed, it isn’t a folksy Jon Boy USA style contribution to an Armageddon grocery list for the benefit of lender’s losses. It’s innovatively named financial poetry, the thought was there, but that’s where it ended. It’s meaningless, pay-outs to lenders for their losses are at the sole discretion of RS. In reality, RS have no obligation to pay us a single penny-farthing. By ring-fencing, I mean contributions to the provision fund in respect of unsecured loans should have been a compulsorily percentage-based amount - governed by a risk factor “well in excess” of that used by RS and above all, with lenders exclusively mentioned in dispatches as beneficiaries. I suggest, contractually phrased in that way, it would have diminished the queue of disenchanted investors and increased RS’s now depleted liquidity. Not getting an Armageddon Grocery List is bad enough, but they're not even going to give me a bicycle? 
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gmd78
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Post by gmd78 on Sept 20, 2020 10:52:06 GMT
Beagle : That is your view, I think differently – nonetheless, your response apropos bank accounts is patently self-evident, if not patronising, unintentionally, or otherwise - and in any event, does not reflect that my views and opinions on subject are in the past tense and retrospective. What has been done, cannot be undone.
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littleoldlady
Member of DD Central
Running down all platforms due to age
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Post by littleoldlady on Sept 20, 2020 11:05:23 GMT
Regarding the account name "Access" it is now several years since the FCA made Savings Stream change it's name to Lendy, objecting to the word "Savings" even though it was made clear on the site that deposits were investments not savings. Using this precedent I would expect the FCA to impose restrictions on the use of "Access" in account names. There are also many precedents that headline terms in general cannot then be contradicted in small print.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
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Post by beagle on Sept 20, 2020 11:08:00 GMT
Beagle : That is your view, I think differently – nonetheless, your response apropos bank accounts is patently self-evident, if not patronising, unintentionally, or otherwise - and in any event, does not reflect that my views and opinions on subject are in the past tense and retrospective. What has been done, cannot be undone. Except it's fact and moaning about it what change it. It Is an opinion correct and you are entitled to yours, no question. However, the reality is the fund is not ever going or was it ever a promised fund E.G. FSCS. no matter how you look at it or however poetically we write about it, that fact remains.
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gmd78
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Post by gmd78 on Sept 20, 2020 11:08:09 GMT
Not getting an Armageddon Grocery List is bad enough, but they're not even going to give me a bicycle? Ha - A welcome injection of humour to this thread
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gmd78
Posts: 57
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Post by gmd78 on Sept 20, 2020 11:17:47 GMT
Regarding the account name "Access" it is now several years since the FCA made Savings Stream change it's name to Lendy, objecting to the word "Savings" even though it was made clear on the site that deposits were investments not savings. Using this precedent I would expect the FCA to impose restrictions on the use of "Access" in account names. There are also many precedents that headline terms in general cannot then be contradicted in small print. Wholeheartedly agreed – the gross misuse of the descriptive term Access, has created more angst and discontent than any other.
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