Nomad
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Post by Nomad on Jan 25, 2024 2:33:16 GMT
Email received apologising for only recovering 97.88% of a defaulted loan.
Funds come from fraud insurance.
"The Directors' first loss tranche was written off in full and the Directors were also the largest lender on this loan in addition to their first loss tranche, so we have suffered more than you.
Whilst it is very disappointing to have to write to you about a loss, at least the loss was far smaller than had we not had fraud insurance."
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iRobot
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Post by iRobot on Jan 25, 2024 9:36:34 GMT
Email received apologising for only recovering 97.88% of a defaulted loan. Funds come from fraud insurance. "The Directors' first loss tranche was written off in full and the Directors were also the largest lender on this loan in addition to their first loss tranche, so we have suffered more than you. Whilst it is very disappointing to have to write to you about a loss, at least the loss was far smaller than had we not had fraud insurance." Interesting insights, Nomad - thanks for sharing. Pity the mentioned 'fraud insurance' isn't mandatory for all P2P platforms. Seems like a no-brainer to take it on a voluntary basis, but I don't think it would be a bad idea for the FCA to mandate it for those platforms undertaking regulated lending activities. It seems to me there'd be a couple of wins from an FCA perspective. # it would be easy to implement and enforce; nice box ticking exercise to help keep those pesky critics at bay # if it were called upon, you can bet your bottom dollar the insurance company would look under every stone to find out exactly what's gone on and whether the were any failures on the platform side - just so they wouldn't have to cough up. In effect, they'd be partially doing the FCA's regulatory monitoring role for them I'd be interested to know the cost of premiums for fraud insurance, and whether HNW have a blanket policy for all loans or if it was put in place specifically for this loan. (If blanket, I'd be hoping that, having exercised their policy, HNW's premiums don't increase so greatly that they are tempted to forgo it when it comes time to renew!)
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Post by overthehill on Jan 25, 2024 10:39:51 GMT
Email received apologising for only recovering 97.88% of a defaulted loan. Funds come from fraud insurance. "The Directors' first loss tranche was written off in full and the Directors were also the largest lender on this loan in addition to their first loss tranche, so we have suffered more than you. Whilst it is very disappointing to have to write to you about a loss, at least the loss was far smaller than had we not had fraud insurance." Interesting insights, Nomad - thanks for sharing. Pity the mentioned 'fraud insurance' isn't mandatory for all P2P platforms. Seems like a no-brainer to take it on a voluntary basis, but I don't think it would be a bad idea for the FCA to mandate it for those platforms undertaking regulated lending activities. It seems to me there'd be a couple of wins from an FCA perspective. # it would be easy to implement and enforce; nice box ticking exercise to help keep those pesky critics at bay # if it were called upon, you can bet your bottom dollar the insurance company would look under every stone to find out exactly what's gone on and whether the were any failures on the platform side - just so they wouldn't have to cough up. In effect, they'd be partially doing the FCA's regulatory monitoring role for them I'd be interested to know the cost of premiums for fraud insurance, and whether HNW have a blanket policy for all loans or if it was put in place specifically for this loan. (If blanket, I'd be hoping that, having exercised their policy, HNW's premiums don't increase so greatly that they are tempted to forgo it when it comes time to renew!) Archover used to sell their loans as Secured and Insured, not that it made any difference to the recovery of my 2 failed loans, ineligible due to the pages of T&C's no doubt. I believe they stopped the insurance due to costs.
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Nomad
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Post by Nomad on Jan 26, 2024 8:05:26 GMT
I don't see any mention of the fraud insurance being specific to this one loan.
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rocky1
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Post by rocky1 on Jan 26, 2024 8:45:37 GMT
many p2p loans also have the added spiel of we also have PGs from the borrowers.which mostly turn out to be worthless when it comes to the crunch.along with this PG the platforms could insist that the borrower takes out. personal guarantee insurance which like most of their fees could be added to the loan amount at the start.
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iRobot
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Post by iRobot on Jan 26, 2024 9:17:49 GMT
many p2p loans also have the added spiel of we also have PGs from the borrowers.which mostly turn out to be worthless when it comes to the crunch.along with this PG the platforms could insist that the borrower takes out. personal guarantee insurance which like most of their fees could be added to the loan amount at the start. No idea if personal guarantee insurance is a thing or not, so assuming it exists then, as with all insurances, there will be conditions attached. If the Borrower / Guarantor fails to honour the conditions of that insurance, it isn't going to pay out. Back to square one. A platform / lender can try to ensure there are as many insurances / guarantees / safety nets as can be dreamt up but the fact remains that P2P is extremely high-risk and (as all the warnings state): " Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you are unlikely to be protected if something goes wrong."
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Post by Ace on Jan 26, 2024 10:10:43 GMT
many p2p loans also have the added spiel of we also have PGs from the borrowers.which mostly turn out to be worthless when it comes to the crunch.along with this PG the platforms could insist that the borrower takes out. personal guarantee insurance which like most of their fees could be added to the loan amount at the start. No idea if personal guarantee insurance is a thing or not, so assuming it exists then, as with all insurances, there will be conditions attached. If the Borrower / Guarantor fails to honour the conditions of that insurance, it isn't going to pay out. Back to square one. A platform / lender can try to ensure there are as many insurances / guarantees / safety nets as can be dreamt up but the fact remains that P2P is extremely high-risk and (as all the warnings state): " Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you are unlikely to be protected if something goes wrong." The implication that all P2P is extremely high risk is simply untrue. Even the incompetent backside-coverers at the FCA have had to relent that the warning you've quoted is not appropriate to all P2P platforms. See article here.
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SteveK
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Post by SteveK on Jan 26, 2024 10:22:52 GMT
Email received apologising for only recovering 97.88% of a defaulted loan. Funds come from fraud insurance. "The Directors' first loss tranche was written off in full and the Directors were also the largest lender on this loan in addition to their first loss tranche, so we have suffered more than you. Whilst it is very disappointing to have to write to you about a loss, at least the loss was far smaller than had we not had fraud insurance." Interesting insights, Nomad - thanks for sharing. Pity the mentioned 'fraud insurance' isn't mandatory for all P2P platforms. Seems like a no-brainer to take it on a voluntary basis, but I don't think it would be a bad idea for the FCA to mandate it for those platforms undertaking regulated lending activities. It seems to me there'd be a couple of wins from an FCA perspective. # it would be easy to implement and enforce; nice box ticking exercise to help keep those pesky critics at bay # if it were called upon, you can bet your bottom dollar the insurance company would look under every stone to find out exactly what's gone on and whether the were any failures on the platform side - just so they wouldn't have to cough up. In effect, they'd be partially doing the FCA's regulatory monitoring role for them I'd be interested to know the cost of premiums for fraud insurance, and whether HNW have a blanket policy for all loans or if it was put in place specifically for this loan. (If blanket, I'd be hoping that, having exercised their policy, HNW's premiums don't increase so greatly that they are tempted to forgo it when it comes time to renew!) Maybe there's an opportunity there for someone/company?! And I like the idea that the insurance company could/would investigate, maybe that would alter the borrowers and P2P company's mindset especially the P2P company that has to adhere to insurance company conditions.
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iRobot
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Post by iRobot on Jan 26, 2024 11:17:24 GMT
No idea if personal guarantee insurance is a thing or not, so assuming it exists then, as with all insurances, there will be conditions attached. If the Borrower / Guarantor fails to honour the conditions of that insurance, it isn't going to pay out. Back to square one. A platform / lender can try to ensure there are as many insurances / guarantees / safety nets as can be dreamt up but the fact remains that P2P is extremely high-risk and (as all the warnings state): " Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you are unlikely to be protected if something goes wrong." The implication that all P2P is extremely high risk is simply untrue. Even the incompetent backside-coverers at the FCA have had to relent that the warning you've quoted is not appropriate to all P2P platforms. See article here. I see. The alternative risk warning is: “ Don’t invest unless you’re prepared to lose money. This is a high‑risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more.” The use of 'extremely' is my own and was meant in a comparative sense. I can't think of any regulated investments classes that are higher risk than P2P. (Especially given the limited upside of P2P relative to the potential downside. It is, imo, an extremely poor risk-reward ratio.)
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rocky1
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Post by rocky1 on Jan 26, 2024 12:14:51 GMT
PGI personal guarantee insurance certainly does exist and costs between 1.6% and 3.9% pa.this would be a better safety net for platforms and lenders and maybe encourage borrowers to get on with it.the FCA are going to do FA so instead of the very expensive way [for lenders] plus years of BS.default the loan and claim on the directors PGI.and let the insurers p*ss about with the borrower. setting up SPVs and going bust is so easy for developers and the PG is worthless or costs lenders thousands in this fee and that fee.i am sure the insurance companies will do their DD and if a borrower was declined i am afraid they would be declined a p2p loan. just think there has to be a better way to protect lenders than all this wild west feeding frenzy that happens at the moment where the only losers are us the people who actually fund the loans and end last in the queue for our own money.
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