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Post by hawkeye4077 on Feb 2, 2021 8:37:04 GMT
<removed by moderator> How is this not illegal?? Ratesetter should share out the provision find in proportion of all outstanding debts per investor to all investors as part of the closedown. As a minimum, they should return the additional funds which were paid by investors during this pandemic. And there is the matter of loans which still have up to s to run many of which return over 5% interest. Metro Bank should be paying - let us say - at least 2% on all outstanding capital. Ratesetter has dropped this “fast bomb” on everybody because they are scared of litigation. <removed by moderator> i am not sure you understand how it works. The provision fund is expected to be used up in full. If they return all funds, there would have been no provision fund and you would have lost capital. it is obviously legal - regulators sign this type of thing off. On what basis do you say "The provision fund is expected to be used up in full"? I've seen no such statement and would be very surprised if that was indeed the case. I'm somewhat with paulk on this. Ratesetter continued to advertise the higher interest rate whilst saying it was a temporary reduction during the Stabilisation period. I have statements from them saying such things as "with half of investors’ interest going to the Provision Fund". Note that's OUR interest going into the fund and as such I would consider the fund to still be holding OUR interest. I never expected to receive the withheld half of the interest in full since the reduction was imposed but there was and is a reasonable expectation that the Provision Fund was for the benefit of the investors. RateSetter could easily have simply halved the interest at the start of the "Stabilisation period" and advertised and quoted the new rate. They didn't; they choose not to. They continued to advertise the 4% (or whatever the rate was) with a proviso that during the stabilisation period, investors would receive half the rate. Note again "receive" - not "due". Seriously questioning the legality of this given the wording of the statements issued by them.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
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Post by beagle on Feb 2, 2021 8:42:04 GMT
i am not sure you understand how it works. The provision fund is expected to be used up in full. If they return all funds, there would have been no provision fund and you would have lost capital. it is obviously legal - regulators sign this type of thing off. On what basis do you say "The provision fund is expected to be used up in full"? I've seen no such statement and would be very surprised if that was indeed the case. I'm somewhat with paulk on this. Ratesetter continued to advertise the higher interest rate whilst saying it was a temporary reduction during the Stabilisation period. I have statements from them saying such things as "with half of investors’ interest going to the Provision Fund". Note that's OUR interest going into the fund and as such I would consider the fund to still be holding OUR interest. I never expected to receive the withheld half of the interest in full since the reduction was imposed but there was and is a reasonable expectation that the Provision Fund was for the benefit of the investors. RateSetter could easily have simply halved the interest at the start of the "Stabilisation period" and advertised and quoted the new rate. They didn't; they choose not to. They continued to advertise the 4% (or whatever the rate was) with a proviso that during the stabilisation period, investors would receive half the rate. Note again "receive" - not "due". Seriously questioning the legality of this given the wording of the statements issued by them. we likely will not agree but anyhow. Provision fund is factored against future losses (per their own stats page). They had to advertise the actual rate and then state the impact therein for the rate after. that is marketing law as long as you state the facts. it is your interest, correct, but it was all of ours and if we had not done that it would be capital losses. ratesetter would not half the rate as the rate was not half at any point. this is an annualized product and therefore it is not half. what question on legality any company can close the doors if they so wish. moreover, with everyone getting capital and interest (albeit lower) back i think this is a major result in a world were most investors were stung in some way.
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adrianc
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Post by adrianc on Feb 2, 2021 8:43:26 GMT
On what basis do you say "The provision fund is expected to be used up in full"? Because that's precisely what the PF is, and what it's always been designed to do. There will always be defaults through the life of the loans. The PF has always been designed to cover those. The PF then gets built back up by new money from new loans to cover the expected defaults from the new loans. The PF fell below the level expected to give coverage, because of higher than expected defaults. The PF was then built back up to where it should always have been - covering expected losses - by the rate cut. If defaults continue at the expected rate, with no new loans, then the PF will be exhausted by those defaults through the remaining life of the existing loans.
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Greenwood2
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Post by Greenwood2 on Feb 2, 2021 8:47:25 GMT
On what basis do you say "The provision fund is expected to be used up in full"? Because that's precisely what the PF is, and what it's always been designed to do. There will always be defaults through the life of the loans. The PF has always been designed to cover those. The PF then gets built back up by new money from new loans to cover the expected defaults from the new loans. The PF fell below the level expected to give coverage, because of higher than expected defaults. The PF was then built back up to where it should always have been - covering expected losses - by the rate cut. If defaults continue at the expected rate, with no new loans, then the PF will be exhausted by those defaults through the remaining life of the existing loans. Of course the chances are it will either fall short or be in profit, getting it exactly right is unlikely. Edit: Metro do get a great deal though, full interest for the rest of the loan term plus a nice plump PF.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
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Post by beagle on Feb 2, 2021 8:49:38 GMT
On what basis do you say "The provision fund is expected to be used up in full"? I've seen no such statement and would be very surprised if that was indeed the case. I'm somewhat with paulk on this. Ratesetter continued to advertise the higher interest rate whilst saying it was a temporary reduction during the Stabilisation period. I have statements from them saying such things as "with half of investors’ interest going to the Provision Fund". Note that's OUR interest going into the fund and as such I would consider the fund to still be holding OUR interest. I never expected to receive the withheld half of the interest in full since the reduction was imposed but there was and is a reasonable expectation that the Provision Fund was for the benefit of the investors. RateSetter could easily have simply halved the interest at the start of the "Stabilisation period" and advertised and quoted the new rate. They didn't; they choose not to. They continued to advertise the 4% (or whatever the rate was) with a proviso that during the stabilisation period, investors would receive half the rate. Note again "receive" - not "due". Seriously questioning the legality of this given the wording of the statements issued by them. we likely will not agree but anyhow. Provision fund is factored against future losses (per their own stats page). They had to advertise the actual rate and then state the impact therein for the rate after. that is marketing law as long as you state the facts. it is your interest, correct, but it was all of ours and if we had not done that it would be capital losses. ratesetter would not half the rate as the rate was not half at any point. this is an annualized product and therefore it is not half. what question on legality any company can close the doors if they so wish. moreover, with everyone getting capital and interest (albeit lower) back i think this is a major result in a world were most investors were stung in some way. Seriously questioning the legality of this given the wording of the statements issued by them. 60 days notice, per the terms www.ratesetter.com/siteassets/media/legal/01-2020-investor-terms-1.pdf16.1
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adrianc
Member of DD Central
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Post by adrianc on Feb 2, 2021 8:54:07 GMT
Because that's precisely what the PF is, and what it's always been designed to do. There will always be defaults through the life of the loans. The PF has always been designed to cover those. The PF then gets built back up by new money from new loans to cover the expected defaults from the new loans. The PF fell below the level expected to give coverage, because of higher than expected defaults. The PF was then built back up to where it should always have been - covering expected losses - by the rate cut. If defaults continue at the expected rate, with no new loans, then the PF will be exhausted by those defaults through the remaining life of the existing loans. Of course the chances are it will either fall short or be in profit, getting it exactly right is unlikely. Oh, absolutely. And - in an ongoing system - that would simply feed into the future fund for the future loans.
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ashe
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Post by ashe on Feb 2, 2021 8:59:01 GMT
My initial thoughts were positive, but I have become a bit more dubious about the legalities after thinking about it.
Put simply - yes, the provision fund isn't our cash, but that claim becomes far more dubious given they've been converting what would have been 'our cash' (50% of interest) into 'their cash' (provision fund), even if it wasn't done at the time with that intention.
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Post by cinereus on Feb 2, 2021 9:01:25 GMT
Was fun while it lasted...
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Greenwood2
Member of DD Central
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Post by Greenwood2 on Feb 2, 2021 9:15:57 GMT
My initial thoughts were positive, but I have become a bit more dubious about the legalities after thinking about it. Put simply - yes, the provision fund isn't our cash, but that claim becomes far more dubious given they've been converting what would have been 'our cash' (50% of interest) into 'their cash' (provision fund), even if it wasn't done at the time with that intention. I'm sure it's legal, but it does seem we were somewhat stitched up, we paid to restore the PF through reduced interest rates, but we barely benefit from that because at the point the PF is back in good condition and interest rates are restored Metro step in buy the loans and enjoy the benefits.
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Post by jockstrap on Feb 2, 2021 9:19:46 GMT
we likely will not agree but anyhow. Provision fund is factored against future losses (per their own stats page). They had to advertise the actual rate and then state the impact therein for the rate after. that is marketing law as long as you state the facts. it is your interest, correct, but it was all of ours and if we had not done that it would be capital losses. ratesetter would not half the rate as the rate was not half at any point. this is an annualized product and therefore it is not half. what question on legality any company can close the doors if they so wish. moreover, with everyone getting capital and interest (albeit lower) back i think this is a major result in a world were most investors were stung in some way. Seriously questioning the legality of this given the wording of the statements issued by them. 60 days notice, per the terms www.ratesetter.com/siteassets/media/legal/01-2020-investor-terms-1.pdf16.1 Huh? According to the linked document: "16.1. We can end our agreement with you, close or suspend your RateSetter account and stop providing any services by giving you at least two months’ notice."
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Post by Ace on Feb 2, 2021 9:19:53 GMT
The Interest Coverage Ratio (ICR) is currently 101%. This predicts that there will be just a little more than enough to pay the contacted interest rates going forward after accounting for defaults. So, there is predicted to be a very small surplus after all loans repay. The cost of implementing a scheme to recompense lenders by a very small amount in each of the tens of thousands of loans that were subject to a rate cut would be far more expensive than the small forecast surplus would warrant.
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Post by Badly Drawn Stickman on Feb 2, 2021 9:24:04 GMT
My initial thoughts were positive, but I have become a bit more dubious about the legalities after thinking about it. Put simply - yes, the provision fund isn't our cash, but that claim becomes far more dubious given they've been converting what would have been 'our cash' (50% of interest) into 'their cash' (provision fund), even if it wasn't done at the time with that intention. I'm sure it's legal, but it does seem we were somewhat stitched up, we paid to restore the PF through reduced interest rates, but we barely benefit from that because at the point the PF is back in good condition and interest rates are restored Metro step in buy the loans and enjoy the benefits. Ethically borderline for sure, I have decided to feel violated. They have quite happily applied a fee to exit some of these accounts, realistically that attributes them a value that should be reflected in acquiring them. I want my 1;5% mark up.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
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Post by beagle on Feb 2, 2021 9:32:13 GMT
whatever the outcome it is clear many would find issue somehow.
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Post by mfaxford on Feb 2, 2021 9:37:55 GMT
My initial thoughts were positive, but I have become a bit more dubious about the legalities after thinking about it. Put simply - yes, the provision fund isn't our cash, but that claim becomes far more dubious given they've been converting what would have been 'our cash' (50% of interest) into 'their cash' (provision fund), even if it wasn't done at the time with that intention. I'm sure it's legal, but it does seem we were somewhat stitched up, we paid to restore the PF through reduced interest rates, but we barely benefit from that because at the point the PF is back in good condition and interest rates are restored Metro step in buy the loans and enjoy the benefits. I had the same thoughts. Certainly the timing doesn't look good in terms of the loan sale being announced shortly after the provision fund returns to 100% coverage. The questions that stand out to me are: - Timeline of the decisions (If MB had planned to buy out at this time regardless of the state of the provision fund it doesn't look as bad)
- Whether investors would have made losses had the provision fund been topped up by the interest rate haircut
When I originally signed up it was on the understanding that the provision fund would pay out what it could, but if it lacked funds then I'd take the cost of any un-recovered defaults. The interest rate haircut changed that understanding, but that's not necessarily a bad thing or an issue.
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ashtondav
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Post by ashtondav on Feb 2, 2021 9:41:10 GMT
I loved the RS product, and made good returns.
Now I’m left with Zopa and AC, and have started dabbling with loanpad And Proplend but their small size is a concern, despite operating successfully over the last year.
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