cwah
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Post by cwah on Jun 19, 2021 23:31:01 GMT
I've been seeing Lendy latest administrator report lately and I got some angers at how much fees are being taken even when there are recoveries...
Now that I'm thinking, the 3 platforms I invested in the UK (Lendy, FundingSecure and Moneything) all went into insolvency... And funnily, the only platform where I made decent money (Mintos) hasn't got authorisation from the FCA to trade in the UK. So I had to remove money from the ONE platform I made money from and was stuck in the other ones thanks to the FCA.
But here are my thought on why it's not investable:
1. Complete lack of liquidity
So the FCA has forced platforms to stop loan trading if it becomes late. I still remember how it completely dried up liquidity the moment it was implemented years ago out of the blue. That's how i got load of fund stucked there. Imagine if in the stock market it wouldn't be possible to trade a stock as soon as it has a negative quarter, how terrible it would be for the market. That's what we have here..
2. Borrower information aren't shared to investors
That one is a big one as well. How many time we have seen loan where we don't have the name of the borrower and just have a headline about some great performance they've done. What we need is some sort of background check, credit check information, the previous companies created and failed, existing debt, etc. For the sack of privacy, this is never provided to do diligence so we have to go through it via due diligence that are NOT provided by the platform.
3. FCA is creating more mess than help for investors
They've put random rules such as asking if the investor know enough to invest, or create condition to dry up liquidity, add rules to "ring fence" loans but of course when all these don't work they'll blame the investors... who remember when the FCA said they thought Lendy shouldn't trade but still allowed it?
And why is it that the investors have to raise legal case using their own fund to fight against administrators? The FCA isn't doing anything to help.
4. Investors are at the mercy of the directors, administrators and creditors
This one is the worse. When the platform fails, the administrators role isn't to protect the investors but the creditors. They have also been recruited by the platform directors so we already know where they stands.
So suddenly their completely unfair term on all recovery for the platform such as the 2% fee from Lendy on the gross loan received including interest.
The administrators are dragging their feet and keep cashing out more and more.
And of course the FCA who isn't here to protect the one thing they exist for....
So even with good loans, when the platform fails, and the recovery takes years, the platform takes years of fees, the administrators as well, and creditors are claiming their shares are well... then not much is left. It completely feels like a scam.
At the moment, I don't think P2P is investable. Because we are not investing in a loan, but rather in the success of the P2P platform we are in. And should things go south, we will pick the bills for everyone.
Happy to hear your thoughts...
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Jun 20, 2021 8:12:13 GMT
I've been seeing Lendy latest administrator report lately and I got some angers at how much fees are being taken even when there are recoveries... Now that I'm thinking, the 3 platforms I invested in the UK (Lendy, FundingSecure and Moneything) all went into insolvency... And funnily, the only platform where I made decent money (Mintos) hasn't got authorisation from the FCA to trade in the UK. So I had to remove money from the ONE platform I made money from and was stuck in the other ones thanks to the FCA. But here are my thought on why it's not investable: 1. Complete lack of liquiditySo the FCA has forced platforms to stop loan trading if it becomes late. I still remember how it completely dried up liquidity the moment it was implemented years ago out of the blue. That's how i got load of fund stucked there. Imagine if in the stock market it wouldn't be possible to trade a stock as soon as it has a negative quarter, how terrible it would be for the market. That's what we have here.. 2. Borrower information aren't shared to investorsThat one is a big one as well. How many time we have seen loan where we don't have the name of the borrower and just have a headline about some great performance they've done. What we need is some sort of background check, credit check information, the previous companies created and failed, existing debt, etc. For the sack of privacy, this is never provided to do diligence so we have to go through it via due diligence that are NOT provided by the platform. 3. FCA is creating more mess than help for investorsThey've put random rules such as asking if the investor know enough to invest, or create condition to dry up liquidity, add rules to "ring fence" loans but of course when all these don't work they'll blame the investors... who remember when the FCA said they thought Lendy shouldn't trade but still allowed it? And why is it that the investors have to raise legal case using their own fund to fight against administrators? The FCA isn't doing anything to help. 4. Investors are at the mercy of the directors, administrators and creditorsThis one is the worse. When the platform fails, the administrators role isn't to protect the investors but the creditors. They have also been recruited by the platform directors so we already know where they stands. So suddenly their completely unfair term on all recovery for the platform such as the 2% fee from Lendy on the gross loan received including interest. The administrators are dragging their feet and keep cashing out more and more. And of course the FCA who isn't here to protect the one thing they exist for.... So even with good loans, when the platform fails, and the recovery takes years, the platform takes years of fees, the administrators as well, and creditors are claiming their shares are well... then not much is left. It completely feels like a scam. At the moment, I don't think P2P is investable. Because we are not investing in a loan, but rather in the success of the P2P platform we are in. And should things go south, we will pick the bills for everyone. Happy to hear your thoughts... I like the points you've made here. Can I suggest you send a version to your MP, demanding that action is taken by the FCA. You may like to expand on some points, and assume your MP isn't fully aware of what property secured P2P lending is all about. I sent a similar letter to my MP last month. I specifically requested the costs of platform administration must be covered by an insurance policy or the FSCS. For those platforms that have already failed, I believe the cost of compensation needs to come from the Complaints Commissioner with the approval of the FCA. My MP has directly taken it up with HM Treasury. Hopefully, your MP will do the same.
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travolta
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Post by travolta on Jun 20, 2021 8:30:51 GMT
I even considered philanthropy as a justification. Fool that I am .
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cwah
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Post by cwah on Jun 20, 2021 11:34:35 GMT
Probably need to send one letter to my mp and one for the FCA
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Jun 20, 2021 13:47:14 GMT
Probably need to send one letter to my mp and one for the FCA Also try these: public.enquiries@hmtreasury.gov.uk complaints@frccommissioner.org.uk
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cwah
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Post by cwah on Jun 20, 2021 14:45:15 GMT
Probably need to send one letter to my mp and one for the FCA Also try these: public.enquiries@hmtreasury.gov.uk complaints@frccommissioner.org.uk So I send an email to the fca, my mp and these 2?
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ashtondav
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Post by ashtondav on Jun 20, 2021 17:43:50 GMT
Oh dear me, the doubters are out and about.
16 years with big Z and still making more than in the BS. In fact over those 16 years better volatility adjusted returns than from some of my equity investments. And no 30% drawdown in 2008 and 2020. Am I delighted with Zopa? No, not totally, but I’ve never lost money.
AC have screwed up by pretending it was an instant access account, but I’m still coining in 4% pa for the last few years, caning inflation and BS accounts.
FC and RS sadly gone for retail investors but I made a tidy wedge with them, we’ll until FC went IPO crazy.
So of course it’s investable if you want an asset that sits neatly between equities and deposits, why the hell do you think investment funds are buying into it? Of course if you don’t want that then just buy the alternatives.
Gold, equities, hedge funds, bonds, gilts, private equity, property, commodities, cash, p2p - even bitcoin, all have a role to play in a diversified portfolio. If you feel uncomfortable with one or more of them then ignore. Of course like Woodford in unit trusts and Madoff in hedge funds, you’ll always Find some shady dogs. My p2p howler was FS, but luckily only a few quid.
So based on 16 years of successful p2p investing, yes it’s investable. Very investable.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jun 20, 2021 19:08:49 GMT
I've been seeing Lendy latest administrator report lately and I got some angers at how much fees are being taken even when there are recoveries... Now that I'm thinking, the 3 platforms I invested in the UK (Lendy, FundingSecure and Moneything) all went into insolvency... And funnily, the only platform where I made decent money (Mintos) hasn't got authorisation from the FCA to trade in the UK. So I had to remove money from the ONE platform I made money from and was stuck in the other ones thanks to the FCA. But here are my thought on why it's not investable: 1. Complete lack of liquiditySo the FCA has forced platforms to stop loan trading if it becomes late. I still remember how it completely dried up liquidity the moment it was implemented years ago out of the blue. That's how i got load of fund stucked there. Imagine if in the stock market it wouldn't be possible to trade a stock as soon as it has a negative quarter, how terrible it would be for the market. That's what we have here.. 2. Borrower information aren't shared to investorsThat one is a big one as well. How many time we have seen loan where we don't have the name of the borrower and just have a headline about some great performance they've done. What we need is some sort of background check, credit check information, the previous companies created and failed, existing debt, etc. For the sack of privacy, this is never provided to do diligence so we have to go through it via due diligence that are NOT provided by the platform. 3. FCA is creating more mess than help for investorsThey've put random rules such as asking if the investor know enough to invest, or create condition to dry up liquidity, add rules to "ring fence" loans but of course when all these don't work they'll blame the investors... who remember when the FCA said they thought Lendy shouldn't trade but still allowed it? And why is it that the investors have to raise legal case using their own fund to fight against administrators? The FCA isn't doing anything to help. 4. Investors are at the mercy of the directors, administrators and creditorsThis one is the worse. When the platform fails, the administrators role isn't to protect the investors but the creditors. They have also been recruited by the platform directors so we already know where they stands. So suddenly their completely unfair term on all recovery for the platform such as the 2% fee from Lendy on the gross loan received including interest. The administrators are dragging their feet and keep cashing out more and more. And of course the FCA who isn't here to protect the one thing they exist for.... So even with good loans, when the platform fails, and the recovery takes years, the platform takes years of fees, the administrators as well, and creditors are claiming their shares are well... then not much is left. It completely feels like a scam. At the moment, I don't think P2P is investable. Because we are not investing in a loan, but rather in the success of the P2P platform we are in. And should things go south, we will pick the bills for everyone. Happy to hear your thoughts... 1/ Totally untrue. There is no restriction on trading late loans. Some platforms decide not to allow trading in loans where lenders are unable to accurately assess the risk. The FCA requires the platform to inform the lender of a default and indicate the likely return, the revised risk classification and any revaluation undertaken. 2/ Partially true - some platforms do provide this information eg AC, others dont eg Loanpad 3/ They are not random rules they are the financial promotion rules that apply to all financial providers. You are complaining about the introduction of investor protections to ensure that people have an appropriate understanding and knowledge of what they are investing in. This is a good thing and I doubt you get very far on that one. I dont understand the point about ringfencing, Loans are ringfenced which is why they are not treated as company assets. There is a difference between a legitimate entitlement to fees and loans being assets. Not sure the FCA can actually interfere in the conduct of administration, that is the competence of the courts. They do have some influence, hence they pushed for the the Lendy directions application, but they cant argue the case in court. 4/ Partially true. They are responsible to the company and its creditors but not the directors. (Hardly think LB/TG are enjoying favourable treatment) Dont know what fee you are referring to there
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cwah
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Post by cwah on Jun 21, 2021 9:20:20 GMT
ilmoroWhen I say random rules, I meant they are just distraction most of the time. There was already a test at the beginning to find out what type of investor it was. The additional rules can be said as good but does nothing about the key issue. For the ring fencing, if you've seen how the loan recovery get eaten by administrative cost and platform fees, you can see it's of not much use and don't protect the investor. The administrator not being on our side will look at way to eat as much as possible into the investors fund available. And there are no remedies against that. Also, not all loans are ring fenced at all (See DFL001 for example as earlier loan) and it makes no difference as well. So it looks more like some chit chat from the FCA about what should be done than rules. For the loan late that have suspended trading, I should have said for "defaulted loan". I think there was something in the FCA I will try to find that back. But I remember loans being stopped when it was late for payment then back on in lendy when they pay again. And lastly, the fees are the "Service fees". It is how it's called by the administrators. They've added that in their T&C afterward which is a shame and it's a damn 3%. That's one of the reason the recovery are getting so low.
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cwah
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Post by cwah on Jun 21, 2021 9:23:26 GMT
Oh dear me, the doubters are out and about. 16 years with big Z and still making more than in the BS. In fact over those 16 years better volatility adjusted returns than from some of my equity investments. And no 30% drawdown in 2008 and 2020. Am I delighted with Zopa? No, not totally, but I’ve never lost money. AC have screwed up by pretending it was an instant access account, but I’m still coining in 4% pa for the last few years, caning inflation and BS accounts. FC and RS sadly gone for retail investors but I made a tidy wedge with them, we’ll until FC went IPO crazy. So of course it’s investable if you want an asset that sits neatly between equities and deposits, why the hell do you think investment funds are buying into it? Of course if you don’t want that then just buy the alternatives. Gold, equities, hedge funds, bonds, gilts, private equity, property, commodities, cash, p2p - even bitcoin, all have a role to play in a diversified portfolio. If you feel uncomfortable with one or more of them then ignore. Of course like Woodford in unit trusts and Madoff in hedge funds, you’ll always Find some shady dogs. My p2p howler was FS, but luckily only a few quid. So based on 16 years of successful p2p investing, yes it’s investable. Very investable. It's a fair point, but if any of these platform goes bust its going to be the end and massive amount of money will be lost. As I said, you are investing in the success of the platform
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jun 21, 2021 12:55:35 GMT
ilmoroWhen I say random rules, I meant they are just distraction most of the time. There was already a test at the beginning to find out what type of investor it was. The additional rules can be said as good but does nothing about the key issue. For the ring fencing, if you've seen how the loan recovery get eaten by administrative cost and platform fees, you can see it's of not much use and don't protect the investor. The administrator not being on our side will look at way to eat as much as possible into the investors fund available. And there are no remedies against that. Also, not all loans are ring fenced at all (See DFL001 for example as earlier loan) and it makes no difference as well. So it looks more like some chit chat from the FCA about what should be done than rules. For the loan late that have suspended trading, I should have said for "defaulted loan". I think there was something in the FCA I will try to find that back. But I remember loans being stopped when it was late for payment then back on in lendy when they pay again. And lastly, the fees are the "Service fees". It is how it's called by the administrators. They've added that in their T&C afterward which is a shame and it's a damn 3%. That's one of the reason the recovery are getting so low. The investor classification was brought in by Lendy in 2018, in prep for Wealth but could be skipped, and by the FCA as mandatory in Dec 19 with the test. The ringfencing may be ineffective due to dubious loan contracts but without it all loans would be the same as DFL001 which was not P2P & therefore not ringfenced. ie lenders a just creditors and get a share of whatevers left. There are two separate issues here. Ringfencing which worked & the dubious contracts on which the FCA failed. The admin can't eat into the investors money beyond the contracts or as agreed. It can be challenged in court eg next Mon Loans weren't suspended on Lendy for late payment though they did stop paying interest. Loans were suspended for material changes in risk profile ie appointment of receivers or admin & then in most cases due to FCA requirements. There are a lot of people who bought defaulted loans without knowing the risk which can't be right. I thought that was what you meant but the 2% stated was confusing. The SLA wasn't introduced in the t&C's. it was introduced by the admin to cover the costs of Lendy managing the recoveries on SSSH behalf as SSSH has no income. The fee is only charged on the gross recovery not the full loan (you are confusing it with FS 5%).
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cwah
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Post by cwah on Jun 21, 2021 15:16:51 GMT
Thanks you look very knowledgeable ilmoroFor all these reasons I consider P2P as un-investable. How the hell should investors use their own money to fight administrator who are also using investor money to pay their case?? That shouldn't even be happening and this sort of case should have been either sorted out before by the FCA OR being led (and paid) by the FCA. This is their role to get clarification on this type of issue!! The condition are very unfavourable to investors because when the platform directors or the administrator make mistakes, it's the investors who pay for it. And the longer the administration last, the more they earn as well. |
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cwah
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Post by cwah on Jun 21, 2021 17:11:12 GMT
Loans weren't suspended on Lendy for late payment though they did stop paying interest. Loans were suspended for material changes in risk profile ie appointment of receivers or admin & then in most cases due to FCA requirements. There are a lot of people who bought defaulted loans without knowing the risk which can't be right. If they were defaulted loan then they should have been marked as such and at least allow to count them at losses for tax purpose. But we were in limbo for which the loans were never in default and not tradable either. That's the type of regulation that should have been done. Mark these as default, get it clear for investors and allow them to deduct losses from taxes. Otherwise let it be as tradable loan. Not something in between that can't be bought/sold and can't be offset against tax as losses.
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ilmoro
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Post by ilmoro on Jun 21, 2021 19:25:24 GMT
Loans weren't suspended on Lendy for late payment though they did stop paying interest. Loans were suspended for material changes in risk profile ie appointment of receivers or admin & then in most cases due to FCA requirements. There are a lot of people who bought defaulted loans without knowing the risk which can't be right. If they were defaulted loan then they should have been marked as such and at least allow to count them at losses for tax purpose. But we were in limbo for which the loans were never in default and not tradable either. That's the type of regulation that should have been done. Mark these as default, get it clear for investors and allow them to deduct losses from taxes. Otherwise let it be as tradable loan. Not something in between that can't be bought/sold and can't be offset against tax as losses. True there was a clear problem with Lendy identifying loans that were in default ... though in theory any loan that had a negative term was in default ... but there is a need to differentiate between loans that were in default and those that were in recovery. Loan that were in recovery were suspended and usually there was some update referencing this fact, even though it was generally vague, at times technically incorrect as no appointment had been made and even resulted in bizare situations where a loan was in recovery but still paying interest as result of the retained funds. Loans that were in recovery could be counted for tax loss purposes although Lendy wasnt helpful in identifying these ... went against their no losses mantra ... but lenders could claim .. someone even pulled together a useful list  Again need to differentiate between loans in default ie overdue & loans in recovery, the former generally werent suspended, the latter were. True and now has been. Platforms are required to clearly indicate defaults, changes in risk etc. They do not have to declare losses until they consider a loan has become irrecoverable but many do once it is treatable as irrecoverable ie in legal recovery. The FCA is not responsible for tax rules, that is HMRC so possibly something they cant actually introduce regulation of. There will inevitably have to be some in between period, when a platform suspends a loan but seeks to resolve the default without calling the loan in, at which point it will be eligible for loss relief, - remember they have to treat borrowers fairly as well - which in theory should result in a better outcome for lenders if successful. The question is how long that period should last and whether lender consent should be sort.
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Post by danraj on Jul 5, 2021 12:03:46 GMT
It is. If you have not yet tried using a conduit p2p platform like ours, rebuildingsociety.com, then you may appreciate the improved transparency. There is more information than on most platforms and a liquid secondary market. Though you should study the loan profiles to understand each business and the risks.
Most the discretionary platforms predicate their business model on achieving a high lending volume, whereas our business model creates value in other ways.
We lost a lot of customers in 2015 who switched to Lendy for the 'higher rates', 'simplicity' and higher lending volumes, by appealing to passive lenders.
I was critical about the passive lending platforms in my response to the FCA's call for input in 2016. It is a pity the regulator waited for a failure before publishing its Post Implementation Review.
We now have a much better sector, please give it another try.
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