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Post by Proptechfish on Mar 24, 2021 3:46:07 GMT
I'm pretty much all out now, been exiting since late 2019, have minor holdings in 2 platforms as portfolio balance and fairly quick access if needed without leaving it rotting in high street bank account. I think the first wave of P2P is done, a decade of great innovators along with pretenders who couldn't handle the heat. FCA finally wakes up late, bringing a rocket launcher to a knife fight. The industry just didn't have the maturity in cash reserves to handle the lows.
I am however optimistic that the industry will come back for round two bigger and stronger. Bricks and mortar retail banking is in a existential crisis, that it will largely not survive. As fintech becomes more ubiquitous, trusted and versatile it will continue to take customers away from establishment finance, further reducing their relevance as a middle man. Credit will largely be democratised within a decade and the P2P model will be at the heart of the transition.....IMO
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macq
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Post by macq on Mar 24, 2021 7:13:28 GMT
I'm pretty much all out now, been exiting since late 2019, have minor holdings in 2 platforms as portfolio balance and fairly quick access if needed without leaving it rotting in high street bank account. I think the first wave of P2P is done, a decade of great innovators along with pretenders who couldn't handle the heat. FCA finally wakes up late, bringing a rocket launcher to a knife fight. The industry just didn't have the maturity in cash reserves to handle the lows. I am however optimistic that the industry will come back for round two bigger and stronger. Bricks and mortar retail banking is in a existential crisis, that it will largely not survive. As fintech becomes more ubiquitous, trusted and versatile it will continue to take customers away from establishment finance, further reducing their relevance as a middle man. Credit will largely be democratised within a decade and the P2P model will be at the heart of the transition.....IMO Its probably true that fintech will grow and become more widely used but does it really have much chance of encouraging Joe public to fund it after whats happened in round One as you call it.Or is it more likely that it will work along side or be used by the traditional finance companies.As you mention they don't have the maturity in cash reserves now and many seem to have noticed that using institutional money is the way to go
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Post by Ace on Mar 24, 2021 8:18:42 GMT
FCA finally wakes up late, bringing a rocket launcher to a knife fight.
Are you sure you've got your analogy right ?
I would describe the FCA's behaviour around P2P as follows :
The Three Monkeys Era : Hear no evil, see no evil, speak no evil. There was, afterall, no FCA registration requirement whatsoever. Totally crazy ! The Cushion to a Knife Fight Era : Too little too late, still arms-length light-touch wishy-washy nonsense
Your analogy of "rocket launcher to a knife fight" suggests a situation where the FCA came in with "too much too late". I would absolutely argue that perception is incorrect. There is so much more the FCA could and should have done.
I'd argue that the FCA haven't even brought the full cushion, maybe just a feather from it.
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p2pfan
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Post by p2pfan on Mar 24, 2021 14:38:56 GMT
These forums are replete with negative sentiment about P2P lending and I myself have very real concerns about the risk-reward ratio for this form of lending.
The risk of sudden platform failure has become a massive concern for me in recent times, as it is a common occurrence. Another major concern is the overly-optimistic valuations of assets published by P2P platforms and the fact that these RICS-surveyor valuations have been proven time and again to be nothing other than fraudulent, resulting in P2P lenders losing a lot of money when these assets have to be sold, yet no P2P platform I've come across has done anything about the hocus-pocus valuations. It proves where their biases lie.
In my case I have sharpened my tools and am being much more careful with who to lend to, upping my game when it comes to Due Diligence, but am very much still investing.
However, even though forums are seldom the place for nuanced conversations, the facts belie the overwhelmingly negative comments about P2P and the impression given here that everyone is leaving the entire sector i.e. the "end of the world is nigh" posture.
Facts: on the majority of P2P platforms I lend via, when loans launch, they get filled up at a far faster speed than in the past. On P2P websites like CrowdProperty it's usually the case that loans get filled up in a matter of 15-20 seconds and on those such as SoMo, Ablrate and Proplend it's often within minutes if not also seconds of them going live. Lenders are desperate to loan via P2P and are doing so in their droves.
Therefore, there is a very real appetite for P2P lending and some P2P platforms are awash with hungry investors' keen to lend to their borrowers.
Critically, despite the pandemic, the aforementioned and other platforms have continued to pay lenders handsome returns with low default rates while those people who've had their money saved in bank accounts have generally lost money as banks have been paying them lower and lower interest over the last year, meaning that most bank account savers are losing money by the day as the interest they receive is below inflation (and that inflation rate will spiral upwards as we come out of lockdown and people start buying again).
[puts on armour in preparation for "the end of the world is nigh" brigade throwing tomatoes at him for not being part of their 'group think']
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iRobot
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Post by iRobot on Mar 24, 2021 14:45:07 GMT
[puts on armour in preparation for "the end of the world is nigh" brigade throwing tomatoes at him for not being part of their 'group think'] Him?  
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toffeeboy
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Post by toffeeboy on Mar 24, 2021 15:58:29 GMT
These forums are replete with negative sentiment about P2P lending and I myself have very real concerns about the risk-reward ratio for this form of lending. The risk of sudden platform failure has become a massive concern for me in recent times, as it is a common occurrence. Another major concern is the overly-optimistic valuations of assets published by P2P platforms and the fact that these RICS-surveyor valuations have been proven time and again to be nothing other than fraudulent, resulting in P2P lenders losing a lot of money when these assets have to be sold, yet no P2P platform I've come across has done anything about the hocus-pocus valuations. It proves where their biases lie. In my case I have sharpened my tools and am being much more careful with who to lend to, upping my game when it comes to Due Diligence, but am very much still investing. However, even though forums are seldom the place for nuanced conversations, the facts belie the overwhelmingly negative comments about P2P and the impression given here that everyone is leaving the entire sector i.e. the "end of the world is nigh" posture. Facts: on the majority of P2P platforms I lend via, when loans launch, they get filled up at a far faster speed than in the past. On P2P websites like CrowdProperty it's usually the case that loans get filled up in a matter of 15-20 seconds and on those such as SoMo, Ablrate and Proplend it's often within minutes if not also seconds of them going live. Lenders are desperate to loan via P2P and are doing so in their droves.
Therefore, there is a very real appetite for P2P lending and some P2P platforms are awash with hungry investors' keen to lend to their borrowers. Critically, despite the pandemic, the aforementioned and other platforms have continued to pay lenders handsome returns with low default rates while those people who've had their money saved in bank accounts have generally lost money as banks have been paying them lower and lower interest over the last year, meaning that most bank account savers are losing money by the day as the interest they receive is below inflation (and that inflation rate will spiral upwards as we come out of lockdown and people start buying again). [puts on armour in preparation for "the end of the world is nigh" brigade throwing tomatoes at him for not being part of their 'group think'] It is the section I have coloured red that causes a lot of the problems with P2P, yes there is a lot of money waiting to be invested via P2P but this drives sites to cut corners on due diligence and accept riskier loans or even worse tactics to ensure that the loans are there for the money to be invested in. At the end of the day P2P sites make money by lending our money to borrowers so the more they can lend the more they can make unfortunately I think this has caused some of the sites to bend the acceptable borrowers/projects to the limit and are left with too many defaults. As mentioned by someone it is all about risk against return, if you think the risk is worth it then go for for it. I am not even going to get started on the FCA as don't have the time.
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Post by mfaxford on Mar 24, 2021 19:24:54 GMT
Critically, despite the pandemic, the aforementioned and other platforms have continued to pay lenders handsome returns with low default rates while those people who've had their money saved in bank accounts have generally lost money as banks have been paying them lower and lower interest over the last year, meaning that most bank account savers are losing money by the day as the interest they receive is below inflation (and that inflation rate will spiral upwards as we come out of lockdown and people start buying again). You are an example of one those people who feels there is nothing wrong with comparing P2P with banks. I'm not sure that p2pfan is comparing P2P with banks. To take the first two sentences from that same post: These forums are replete with negative sentiment about P2P lending and I myself have very real concerns about the risk-reward ratio for this form of lending. The risk of sudden platform failure has become a massive concern for me in recent times, as it is a common occurrence. There does still seem to be a lot of money being invested in P2P (or at least loans are filled relatively quickly with plenty waiting to be lent out) the better question might be is that because: - Platforms are doing suitable due diligence on borrowers so fewer loans are being made
- People are treating P2P like banks and are expecting risk free returns with no effort
- People have done their due diligence into the platforms they use and are happy with the risk/reward ratio
I suspect there's a fair chunk of #2 going on (judging by the 23m queued in the RS 5 year market it would seem likely). Most who are active here should have done #3 and are being careful about what their exposure is along with whether the risk/reward is worth it. That decision will be different for all of us and even our choices of platform may differ. If the risk/reward isn't worth it or our exposure is too high then you should be withdrawing money. For any platform to survive long term then #1 should be true for them. Some platforms look to be doing this but others may not. I think things were better in the early days well before the FCA got involved. In those early days the majority of investors where aware of the risks and the platforms had to make an effort to demonstrate what they were doing to mitigate those risks. Over time things have become more opaque and newer companies can do just enough to keep the FCA happy and pretend they've dealt with all the risks.
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shw
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Post by shw on Mar 24, 2021 20:01:21 GMT
The core issue for me is that you cannot trust the LTV% as the valuation is a crock of FYM.
I assumed their might be some credibility in the professional valuation = very wrong,fall back valuer insurance no good either.
Then there is the credibility of the borrowing party,who probably cannot borrow elsewhere,again for me a disaster.Like managed funds the only guarantee is that fees will be taken whether the assets increase or decrease in value or default.
Assuming you could get lucky with loans you invest in,the best outcome is possibly break even at best assuming a good spread of risk.
Any P2P that looks rosy today,just like MT did to me,probably has a disaster around the corner like a borrower taking them to court for incorrect action which in our case put MT into administration (or was it also the loan book that was looking sicker by the day even before the pandemic).
You keep investing in P2P and good luck to you,hope you have plenty of CGT losses carried forward to help mitigate your P2P losses.
Violins at the ready for the crystallised losses when they eventually show their ugly face so I can stop monitoring where my hard earned cash disappeared down the black hole.
Wish I had gambled on line,or backed a losing horse or dog - at least there could have been some enjoyment 😉
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Post by Proptechfish on Mar 24, 2021 23:45:19 GMT
FCA finally wakes up late, bringing a rocket launcher to a knife fight.
Are you sure you've got your analogy right ?
I would describe the FCA's behaviour around P2P as follows :
The Three Monkeys Era : Hear no evil, see no evil, speak no evil. There was, afterall, no FCA registration requirement whatsoever. Totally crazy ! The Cushion to a Knife Fight Era : Too little too late, still arms-length light-touch wishy-washy nonsense
Your analogy of "rocket launcher to a knife fight" suggests a situation where the FCA came in with "too much too late". I would absolutely argue that perception is incorrect. There is so much more the FCA could and should have done.
Ofc I agree entirely, I specifically had the Col case in mind, an over reaction to catastrophic failings and oversight, resulting in a less than orderly wind down of a company and very likely huge customer losses, but in most other cases the FCA's responses have been impotent to say the least.
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Post by df on Mar 25, 2021 0:03:32 GMT
meaning that most bank account savers are losing money by the day as the interest they receive is below inflation (and that inflation rate will spiral upwards as we come out of lockdown and people start buying again). I don't think I've ever been below inflation with my bank accounts, always above. At this moment my lowest paying account is 1.02%, but the rest are higher (inflation is 0.4% atm if what I read is correct). With p2p I don't know where I am, some investments were fruitful, some broke even or near, some awaiting results... for my loan book the BDO's outcome could give me some idea, whenever that might happen. I'm not exiting p2p, but majority of my cash is in banks, p2p has only what I can afford to play/gamble with.
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ceejay
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Post by ceejay on Mar 25, 2021 10:41:49 GMT
I'm not sure that p2pfan is comparing P2P with banks
The very phrase used by p2pfan :
"the aforementioned and other platforms have continued to pay lenders handsome returns with low default rates while those people who've had their money saved in bank accounts have generally lost money as banks have been paying them lower and lower interest over the last year"
I would call that comparing P2P to banks. Its impossible to interpret that phrase any other way.
People often seem to get very agitated by the use of the term "comparing", possibly because they are erroneously equating it to "equating". There is nothing at all wrong in comparing P2P with banks - look at the similarities, look at the differences. Just as you can compare P2P with FSCS cash, S&S, Bitcoin, and tulips.
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Post by mfaxford on Mar 25, 2021 11:28:20 GMT
People often seem to get very agitated by the use of the term "comparing", possibly because they are erroneously equating it to "equating". There is nothing at all wrong in comparing P2P with banks - look at the similarities, look at the differences. Just as you can compare P2P with FSCS cash, S&S, Bitcoin, and tulips. I'd agree with that, I'd been trying to find a way to reply with something similar and was failing. The point I was trying to make previously was that the rest of wallstreet's post seemed to imply that p2pfan was equating P2P with banks which I don't think is the case.
One thing I have noticed is that the majority of those who seem very against P2P mostly seem to talk about larger secured loans (often property development) where the risks could be less obvious. For those of us that started when the only platforms were providing smaller unsecured loans the risks were obvious up front and so were managed. Incidentally this is the first month where the defaults on my investments might be higher than the interest I receive. That's part of what goes into my decision making process of whether I: invest more, re-invest the repayments, withdraw the repayments, or sell out as much as possible. At this point it doesn't change my current plans, what happens over the next weeks/months and what faith I have in the platform might change that in future. The comparison (similarities and differences) between P2P and banks will likely change depending on the form of P2P you're looking at.
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Post by Ace on Mar 25, 2021 12:05:07 GMT
ceejay you are talking complete drivel.
You cannot comapre P2P to banks.
You cannot compare the low rates paid by banks to the high rates paid by P2P.
You cannot compare P2P to bank savings like p2pfan did (" while those people who've had their money saved in bank accounts")
There are no "similarities" between banks and P2P, only thousands of extreme differences
Look. If you want to put your money into P2P, then fine. But for god's sake recognise P2P for what it is, a risky environment with significant risk in all areas (institutional, product etc.) that is absolutely not comparable in any way, shape or form to bank accounts.
P2P is the equivalent to taking you to a bridge. Cutting a bungee rope in two, putting a weak magnet in the middle and inviting you to jump.
The magnet might hold, in which case you will survive and have a great time. But you never know if the magnet might seperate, or in what circumstances it might come loose.
You seem to be missing the point @wallstreet, what you are doing here is comparing P2P to banks. You need to compare them to decide that they are different. Comparing is fine and necessary. Equating is not.
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macq
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Post by macq on Mar 25, 2021 12:54:27 GMT
But i can drive a car to chippy if i am really hungry try doing that with a bowl of pasta
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ceejay
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Post by ceejay on Mar 25, 2021 14:13:46 GMT
ceejay you are talking complete drivel. You cannot comapre P2P to banks. You cannot compare the low rates paid by banks to the high rates paid by P2P. You cannot compare P2P to bank savings like p2pfan did (" while those people who've had their money saved in bank accounts")
There are no "similarities" between banks and P2P, only thousands of extreme differences
Look. If you want to put your money into P2P, then fine. But for god's sake recognise P2P for what it is, a risky environment with significant risk in all areas (institutional, product etc.) that is absolutely not comparable in any way, shape or form to bank accounts. P2P is the equivalent to taking you to a bridge. Cutting a bungee rope in two, putting a weak magnet in the middle and inviting you to jump.
The magnet might hold, in which case you will survive and have a great time. But you never know if the magnet might seperate, or in what circumstances it might come loose.
What tosh. "There are no "similarities" between banks and P2P". ... really? In both cases I can pay money in, and (hopefully) get it back later. I can log in and get a statement of my current position. Tax may be payable on the income. Etc, etc, etc. There are, I agree, many differences, relating to both risk and return. But they are most definitely comparable, as you have so eloquently demonstrated yourself. Now, if I were to try to compare P2P investment to, say, a pencil then I might struggle. One might say in that case that an attempted comparison would be a category error - but not when we are seeking to compare and contrast two different places I might put my money, however different the risk/reward profiles might be. I will grant that the usage of "compare" is confounded by the problem that it is sometimes used in the other sense as well, looking primarily at similarities (Moeen Ali has been compared to David Gower...) although even in that usage it is generally acknowledged that there are likely to be significant differences as well (one is a handy spinner, the other is not).
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