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Post by df on Feb 17, 2021 22:33:05 GMT
Agreed. And the important thing - very important, imo - is to understand what the order of priority is for repayments in the event of default. Most platforms I'm aware of which offer tranches, structure their default repayments in one of two ways: Tranche A Capital
Tranche A Interest
Tranche B Capital
Tranche B Interest
Tranche C Capital
Tranche C Interest | -or- | Tranche A Capital
Tranche B Capital
Tranche C Capital
Tranche A Interest
Tranche B Interest
Tranche C Interest
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This is particularly key when considering loans on a platform's Secondary Market; especially when the up-front interest has been stripped out and the loan is listed by those wishing to avoid 'term-risk'. There is - again, imo - no point taking a later-life Tranche C loan offered on an SM, having been perhaps attracted by the higher rate of interest, if Tranche A and B's Capital and Interest is going to be repaid before Tranche C's Capital, let alone interest. Defaulted loans can take years to redeem and all the while interest on the higher ranked Tranches accrues, the probability that Tranche C receives any Capital diminishes by the day. I think platforms could improve their Ts&Cs by making the 'default repayments' section a lot clearer; using a numerical illustration rather than just relying on (potentially ambiguous) wording would go along way, imo. For what it's worth (a big fat zero, obvs), I'd only invest in Tranche A of loans which fell into the first camp, whether primary or secondary market. Based on the 'names in the frame' currently. I get the feeling the secondary market may have a lot for sale but few buyers in the early days. Any investments would realistically have to be viewed as held to term. Little doubt your reasoning is sound (absolute minimum of little thin zero - given no scale was offered). I would still expect the higher rates to fill before the lower on pawn loans (human nature). If and when property loans/assorted others start to appear there may be a change in dynamics. I just wonder if there is the appetite for this type of platform for it to reach the critical mass that would allow a decent loan flow, if it did I just wonder if it would not just become FS MK2. That was my immediate 'working title' for this platform when I looked at it. Not just because of a former director, but nuts and bolts that he brought in. The only differences I found so far are tranches for bling and tighter limit on SM. It will be interesting to see the impact of property loans when they come in. I hope they know that applying pawn model to property leads too disaster. We'll see what happens, but it will be funny if at some point we'll see re-introduction of niche collectables, memorabilia and wishful projects, never mind multimillion paintings collections 
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Post by df on Feb 17, 2021 22:42:52 GMT
I do like the idea of the 3 tranches as it allows even more flexibility for investment. I would imagine that if and when more investors sign up on here that these sort of loans will fill a lot more quickly than it Currently takes as well. Looking around a few other sites it appears to be property that most other sites deal with. Yes, mainly property or SME's secured on property. Some offer unsecured consumer loans. Can't avoid property if you want to diversify.
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james100
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Post by james100 on Feb 18, 2021 10:16:50 GMT
Some of the experienced chattel lenders seem to think the Rolex is a good bet on having the expected value and that the loan will be renewed so now is a good time to go for high rates. For me I think I would go for the lower LTV and a bit of extra cushion on the item selling under value. The lowest rate tranche also gets all it's interest first, before the other tranches get capital back (not sure if the higher rate LTVs allow for that) and if it went to auction there would be auction fees to pay, maybe 15%. Just call me cautious, or once bitten! Absolutely agree on going for lower LTVs. Auction fees are often woefully underestimated and IMHO its why UB does so well integrating a disposal unit (Fellows) in their business model. A quick look at fees there: www.fellows.co.uk/faq "Our seller's commission charge is 12.5% (plus VAT) on items with a hammer price of over £3,001, or 15% (plus VAT) for items with a hammer price of £3,000 or under." [but also] "On the first £100,000 of the Hammer Price (of any individual lot) the buyer will pay the hammer price and a premium of 23% (plus VAT) or 27.6% (inclusive of VAT)". Both fees come off the "value" when it gets liquidated. Those numbers aren't particularly high by the way; online (list and leave) consignment houses charge upwards of 20% commission (30% for a decent one) and bricks and mortar consignment (think Knightsbridge boutique) up to 50%. Also it's worth bearing in mind the impact of Brexit and the new 20% "import VAT" charges which may now be applied to EU buyers of luxury goods from UK. Vestiaire Collective which currently has about 2500 second hand Rolex watches for sale has a bright and breezy update here reassuring that there are no changes for sellers, but simultaneously emailed sellers to drop prices on items to directly compensate for this. Not a problem when the UK economy is booming or for highly specialized/collectible items (but most of the pawnbroker stuff isn't special and the UK's current economic situation needs no comment).
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shw
Posts: 51 
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Post by shw on Mar 6, 2021 12:30:38 GMT
Although I thought I knew the risks with P2P given the headline rates versus general market conditions about 6 years ago the grating issue for me is the asset valuation by a professional,who I always thought had to have liability insurance that could be used when mistakes were made = how wrong I was,insurance is worthless.So even low LTV % is unsafe especially when a borrower defaults because the admin fees to recover any monies cost a damn sight more than the loan interest you were offered in the first place.You may get 50p in the £ back of your hard earned cash if are lucky and more importantly have to wait many months if not years to get anything from the administrators.
The second grating issue is the out and out lies used to get you to invest more cash as the borrower's project is making good progress and needs a further tranche of cash to complete.Rightly or wrongly,and even when the platform says they have visited the project to evidence progress,it turns out to be lies.Often the members of this forum end up visiting the project and tell the truth - unfortunately this is too late to get your cash back out of the loan.
So my learning,with substantial losses,is either stay clear of P2P,it is generally poisonous,or if you do invest,spread your cash across loans and have the P2P investment as your highest risk in your portfolio.
Be prepared to lose all your cash in the majority of loans.
Or,if like me,you have other CGT gains you can write these losses off against to save you some tax.
A Rolex watch or classic car might just be a better punt or be brave and pick some company stocks for a longer investment return.
As many have said "if it's too good to be true,it normally is".
Also beware I suspect some forum users could be linked to P2P platforms so don't believe everything you read !!
However the P2P Independent Forum is probably the only place you can share your honest opinion,so I support its purpose.
Only place an single investor can share or even vent their frustration or anger.
I feel better already - lol.
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Post by Ace on Mar 6, 2021 13:44:42 GMT
Although I thought I knew the risks with P2P given the headline rates versus general market conditions about 6 years ago the grating issue for me is the asset valuation by a professional,who I always thought had to have liability insurance that could be used when mistakes were made = how wrong I was,insurance is worthless.So even low LTV % is unsafe especially when a borrower defaults because the admin fees to recover any monies cost a damn sight more than the loan interest you were offered in the first place.You may get 50p in the £ back of your hard earned cash if are lucky and more importantly have to wait many months if not years to get anything from the administrators. The second grating issue is the out and out lies used to get you to invest more cash as the borrower's project is making good progress and needs a further tranche of cash to complete.Rightly or wrongly,and even when the platform says they have visited the project to evidence progress,it turns out to be lies.Often the members of this forum end up visiting the project and tell the truth - unfortunately this is too late to get your cash back out of the loan. So my learning,with substantial losses,is either stay clear of P2P,it is generally poisonous,or if you do invest,spread your cash across loans and have the P2P investment as your highest risk in your portfolio. Be prepared to lose all your cash in the majority of loans. Or,if like me,you have other CGT gains you can write these losses off against to save you some tax. A Rolex watch or classic car might just be a better punt or be brave and pick some company stocks for a longer investment return. As many have said "if it's too good to be true,it normally is". Also beware I suspect some forum users could be linked to P2P platforms so don't believe everything you read !! However the P2P Independent Forum is probably the only place you can share your honest opinion,so I support its purpose. Only place an single investor can share or even vent their frustration or anger. I feel better already - lol. These sentiments are often voiced, and they certainly do apply to many fraudulent and incompetent platforms. However, IMO, it's simply not fair to tar all platforms with the same brush. There are many honest and trustworthy platforms that are doing an excellent job of returning stable and consistent risk adjusted returns. I don't personally see these as high risk, though it is still prudent to diversify ones funds over many loans on many trusted platforms. I personally try to keep each loan well under 1% of my P2P portfolio and each platform under 20%. I do occasionally break these limits, but fool on me if it goes wrong. One major difficulty in P2P, particularly for newbies, is to tell the good from the bad. While this is almost impossible for new platforms, some basic research will help with those that have been around for a while. Platforms that have a long history where the security is sold for sums that are commensurate with the original valuations would be a very good sign. I won't bore readers further by trotting out my usual list of preferred platforms, especially as I am "linked" to many platforms via equity investments in them. I don't believe this influences my comments on here. There's plenty of evidence of me slagging off some of them that haven't met my expectations.
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ozboy
Member of DD Central
Mine's a Large One! (Snigger, snigger .......)
Posts: 3,156
Likes: 4,830
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Post by ozboy on Mar 6, 2021 14:48:59 GMT
Although I thought I knew the risks with P2P given the headline rates versus general market conditions about 6 years ago the grating issue for me is the asset valuation by a professional,who I always thought had to have liability insurance that could be used when mistakes were made = how wrong I was,insurance is worthless.So even low LTV % is unsafe especially when a borrower defaults because the admin fees to recover any monies cost a damn sight more than the loan interest you were offered in the first place.You may get 50p in the £ back of your hard earned cash if are lucky and more importantly have to wait many months if not years to get anything from the administrators. The second grating issue is the out and out lies used to get you to invest more cash as the borrower's project is making good progress and needs a further tranche of cash to complete.Rightly or wrongly,and even when the platform says they have visited the project to evidence progress,it turns out to be lies.Often the members of this forum end up visiting the project and tell the truth - unfortunately this is too late to get your cash back out of the loan. So my learning,with substantial losses,is either stay clear of P2P,it is generally poisonous,or if you do invest,spread your cash across loans and have the P2P investment as your highest risk in your portfolio. Be prepared to lose all your cash in the majority of loans. Or,if like me,you have other CGT gains you can write these losses off against to save you some tax. A Rolex watch or classic car might just be a better punt or be brave and pick some company stocks for a longer investment return. As many have said "if it's too good to be true,it normally is". Also beware I suspect some forum users could be linked to P2P platforms so don't believe everything you read !! However the P2P Independent Forum is probably the only place you can share your honest opinion,so I support its purpose. Only place an single investor can share or even vent their frustration or anger. I feel better already - lol. Unless I misunderstand your posting shw, you started P2P investing around 6 years ago? In which case, IF you were a member of this forum at the time, it seems that you didn't read LENDY PBL157/PBL158 - R*****a & C****t, H****** Court Rd DEFAULT? Where the questions about the Great Valuations ConScam kicked off. Or perhaps you were one of the vast majority whose unfathomable position at the time was "Inaccurate/Over Valuations? Not to worry, not important, not a problem, that's just the way it is, accept it." !!! If not, read PBL157/158 now and weep. I led an entire team of horses to water, and only two or three took a drink.
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shw
Posts: 51
Likes: 90
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Post by shw on Mar 6, 2021 21:00:49 GMT
No,only found the forum in recent times so did not heed warnings.you seem to enjoy commenting on here so I assume you have done okay from your wise P2P investments - good for you.Where else to you invest to get a return above inflation that is relatively safe ?
I see your not a fan of FCA either,do you have experience of leveraging investors voice with Administrators should they choose to engage with investors !
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ozboy
Member of DD Central
Mine's a Large One! (Snigger, snigger .......)
Posts: 3,156
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Post by ozboy on Mar 6, 2021 22:38:21 GMT
"........... so I assume you have done okay from your wise P2P investments."I wish shw , quite the contrary. By the time I realised several years ago that FS and MT were a crock, it was virtually impossible to leave swiftly and I was locked into their zombie loans. I did however manage to flee Lendy entirely unscathed thanks to a very liquid secondary market at the time - people were even hungrily buying virtually defaulted Loans which were well overdue/unpaid! Generally speaking, liquidity is appalling in P2P and virtually nonexistent - a Major negative for me. COLL is an entirely different and unique kettle of fish, represents a new and alltime low, and I have probably lost a LOT and the most there. Again I saw it coming and was elegantly withdrawing and would have been out within 6 months, except The Grossly Incompetent FCA woke up with a startle from their deep slumber and kneejerkingly & destroyingly intervened - care and protection of Consumers being the last thing on their mind....... "You can trust the Register!" I don't think anyone on here has any time for the FCA, they are simply not to be trusted. With very good reason, any firm proudly displaying "FCA Authorised & Regulated" needs to be treble checked. And then treble checked again, because "FCA Approval" is meaningless.. Personally, and do your own research, this is not a recommendation, etc, etc, I want to lead a life now as free of chicanery, lying, dishonesty, crooks, thieves and "Professional Valuations" as best I can, so am/have moved into Managed Funds & Trackers with the Max in Premium Bonds for some fun. Fundsmith and Vanguard to name but two, and these are not recommendations.
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michaelc
Member of DD Central
Posts: 4,841
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Post by michaelc on Mar 6, 2021 23:51:06 GMT
I’m not a FCA hater, well not yet anyway. I’ve never assumed the FCA would protect me from losses or platform failures. Those risks I have to assume responsibility for myself. What I do expect of the FCA is that they don’t let any director associated with a heinous platform failure or serious failure of regulation to work in a senior position in financial services again. The main impact regulation would have on the weak platforms was always that they’d end up being shut down as the regulatory requirements weren’t being met. And it’s never great for anyone on the platform when it’s shut down but it does protect potential future clients. You could argue that P2P should never have been allowed to start, but that was a government objective and they have little real understanding of anything but want the latest craze to create new companies in the uk on the simplistic assumption they’d create jobs and economic prosperity and wealth. The government doesn’t want to see high regulatory burdens killing off start-ups and new industries before they get going. Inevitably that means the failures and accompanying wealth destruction comes further down the line. The government drove the introduction of IFISA and handed out gongs to P2P CEOs before any positive long lasting legacies had been built. Promoting “fintech” and making the uk more attractive to financial wizardry (spacs) is topic/objective of the day currently with the government. Inevitably that’ll mean compromising regulatory requirements. The simplest thing for newbies is to avoid anything they don’t understand. Anyone who hasn’t got the skillset below (not exhaustive) shouldn’t lightly go near P2P nor any other financial wizardry - a broad understanding of regulation - a broad understanding of strategy and how to analyse industries and companies - can read P&L and balance sheets and know what to trust and what to question, what tricks are “allowed” with manipulating accounting profits etc - an understanding of debt - numeracy enough to do IRR calculations. Even with that skill set if you can’t apply it rigorously and regularly and confidently you probably want to stay away. Even if you meet the application of skills criteria you will often not have enough and timely information on which to form an accurate current conclusion. So a director associated with a serious failure of regulation should be punished by being allowed to work in a junior or mid ranking role within a financial services company? The FCA should do a lot more than check if a director is a fit and proper person to run such a company. For P2P they should be responsible for laying down some ground rules. e.g. What information needs to be published by the platform and how often.
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Greenwood2
Member of DD Central
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Post by Greenwood2 on Mar 7, 2021 8:06:15 GMT
I’m not a FCA hater, well not yet anyway. I’ve never assumed the FCA would protect me from losses or platform failures. Those risks I have to assume responsibility for myself. What I do expect of the FCA is that they don’t let any director associated with a heinous platform failure or serious failure of regulation to work in a senior position in financial services again. The main impact regulation would have on the weak platforms was always that they’d end up being shut down as the regulatory requirements weren’t being met. And it’s never great for anyone on the platform when it’s shut down but it does protect potential future clients. You could argue that P2P should never have been allowed to start, but that was a government objective and they have little real understanding of anything but want the latest craze to create new companies in the uk on the simplistic assumption they’d create jobs and economic prosperity and wealth. The government doesn’t want to see high regulatory burdens killing off start-ups and new industries before they get going. Inevitably that means the failures and accompanying wealth destruction comes further down the line. The government drove the introduction of IFISA and handed out gongs to P2P CEOs before any positive long lasting legacies had been built. Promoting “fintech” and making the uk more attractive to financial wizardry (spacs) is topic/objective of the day currently with the government. Inevitably that’ll mean compromising regulatory requirements. The simplest thing for newbies is to avoid anything they don’t understand. Anyone who hasn’t got the skillset below (not exhaustive) shouldn’t lightly go near P2P nor any other financial wizardry - a broad understanding of regulation - a broad understanding of strategy and how to analyse industries and companies - can read P&L and balance sheets and know what to trust and what to question, what tricks are “allowed” with manipulating accounting profits etc - an understanding of debt - numeracy enough to do IRR calculations. Even with that skill set if you can’t apply it rigorously and regularly and confidently you probably want to stay away. Even if you meet the application of skills criteria you will often not have enough and timely information on which to form an accurate current conclusion. So a director associated with a serious failure of regulation should be punished by being allowed to work in a junior or mid ranking role within a financial services company? The FCA should do a lot more than check if a director is a fit and proper person to run such a company. For P2P they should be responsible for laying down some ground rules. e.g. What information needs to be published by the platform and how often.I thought the FCA had laid some ground rules, lenders have to declare their status and have to pass a test to 'prove' they understand the model, retail lenders should only lend 10% of their capital. Platforms have to have a wind down plan and have to publish statistics in a particular format, Client accounts ring fenced, etc, etc. Whether it's enough or whether platforms are really doing the things they should be or just paying lip service are the questions. Another skill required for P2P is common sense, if someone is offering you 12% interest in a low interest rate environment be extremely suspicious and cautious. And an oldie but goodie, don't lend more than you could afford to lose.
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ozboy
Member of DD Central
Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Mar 7, 2021 10:36:01 GMT
"I’ve never assumed the FCA would protect me from losses or platform failures. Those risks I have to assume responsibility for myself. What I do expect of the FCA is that they don’t let any director associated with a heinous platform failure or serious failure of regulation to work in a senior position in financial services again."Give us all a break Deees. You make interesting postings, but you are missing the FCA point by a country mile. 1/ Most on here are experienced Investors and don't assume the FCA will protect us from platform failures/losses, we are informed and know the risks. We do (did!), however, assume that the FCA is/was doing the Basic Day Job and performing the Basic Due Diligence they loftily order Others to do and tell Consumers they are doing. Except they're not, we are all aware of the FCA litany of failures. 2/ Most on here assume the risks responsibility, based on the above expectations from the FCA and what it is supposed to be doing and tells Consumers it is doing, except, again, it's not. 3/ You seem to have omitted Prosecuting and Jailing a proven crooked P2P Director? (I would also add in Borrowers and "Professional Valuers" myself.) You seem to think allowing them back into Financial Services but in a lower position is OK? I am sure you don't mean that. It is patently obvious that the FCA is a failed organisation, arrogant, grossly incompetent and not fit for purpose.
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ozboy
Member of DD Central
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Posts: 3,156
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Post by ozboy on Mar 7, 2021 11:27:00 GMT
Give us all a break = Leave us to wallow in our crowd think. I’ll happily oblige. You should join an Outlaw Motorcycle Gang Deees, they often call themselves "The One Percenters."  You are either being deliberately obtuse, for some unfathomable reason, or you genuinely fail to grasp the valid FCA failure points many on here are trying to make (as indeed are the Financial Journalists). I don't believe that you don't believe the FCA is not at fault in many areas, you're playing some weird game. We have had your misguided Flag Waving Cheerleaders on here before and they always end up with egg on their faces. Please continue making a mammary of yourself, it's highly entertaining. 
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Balder
Member of DD Central
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Post by Balder on Mar 7, 2021 11:47:32 GMT
Be much better off investing in Fundsmith returned average 17% pa since inception including 18.3% in 2020.
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ozboy
Member of DD Central
Mine's a Large One! (Snigger, snigger .......)
Posts: 3,156
Likes: 4,830
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Post by ozboy on Mar 7, 2021 11:53:27 GMT
AND he doesn't charge extra to hold in an ISA. This is not investment advice, do your own research and due diligence, yadda yadda yaddda .......... |
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ozboy
Member of DD Central
Mine's a Large One! (Snigger, snigger .......)
Posts: 3,156
Likes: 4,830
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Post by ozboy on Mar 7, 2021 12:05:48 GMT
Flag Waving Cheerleader? I have consistently, from the very start, held the view that most P2P platforms will fail and probably the whole fledgling nano P2P industry. I still hold that view. I’ve never taken the view that I can protect myself from platform failure through platform diversification as many self appointed experienced investors on here used to claim. Nor do I cling to any other non-analytical harbingers of platform survival. My approach has been for, better or worse, to at any one time pick the single most likely platform to survive and focus primarily on just one platform until such time as the foreseeable future darkens. As diligently as possible constantly evaluating as many risks as I can. With few platforms left that are open to retail lenders I can envisage a time in the next year or two where there are no platforms left that I have confidence in surviving and that are remotely offering decent all risks considered adequate rewards. ozboy thank you for your compliment that I “make interesting postings”. I wish I could sincerely return the compliment! Thanks For The Mammaries. (With apologies to Frank Sinatra.)
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