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Post by mrclondon on Aug 12, 2015 10:24:05 GMT
At this stage in the evolution of p2p/p2b ALL platforms carry a risk that they may fold unexpectedly. Thus far, the failure of p2p platforms has not resulted in significant losses to lenders (Quakle being the notable exeception). I have expressed my concerns that MT's diversification in to electronics pawn has increased the platform risk IF their partner The Cash Shop was to go bust as I'm uncertain MT would be able to realise the loan value from the electronics security. I have also on a number of occaisons said that I believe under the current structure that IF Lendy/SS were to fail, the administrators would apportion losses from defaulting loans to all lenders not just those notionally linked to the individual loans. The fixed yield at SS disguises the fact that the loans would be priced 10 to 15% on other platforms, and there are a few genuinely high risk loans on SS. TC has had well documented software issues and lax management, AC has had a raft of admin issues as they scale up and a batch of suspect security valuations, FS has had problems with art valuations and some internal admin issues with asset disposal, Bondora's expansion strategy appears to have misfired as riskier markets were included, some of the smaller players have insufficeint volume for it to be worthwhile long term. Its hard to find a platform that doesn't have significant risk factors. Short term the "safer" platforms are probably those whose balance sheets contain VC / Private Equity to fund onging expansion burn of cash, and its comforting (to me) that TC is at long last about to join this group. The next few years with the advent of capital loss offset and ISA's is going to have a significant impact on the sector, and those platforms with a good funding cushion are the best placed to capitalise on the likely expansion of the sector whilst riding through quieter periods of the year (such as now). As someone commented earlier, it is important to diversify across platforms as well as between loans on a particular platform.
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jonno
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Post by jonno on Aug 12, 2015 10:38:03 GMT
[Mod hat on] Financial Thing Your post is "potentially libelous" and has exposed yourself to the risk of legal action against you. You would be well advised to explain your reasoning or to publicly retract it as a matter of urgency. I would also strongly recommend you approach the FCA with any information you have. The mod team may ultimately decide to hide your post (and the subsequent discussion of it) but for now they remain unmoderated to act as a reminder that a platform risk that is perhaps not routinely considered is the risk of unsubstantiated allegations against a platform causing lender panic. ; just in case you weren't aware, this issue has migrated onto the SS thread, under " Platform Risk?".
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trevor
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Post by trevor on Aug 12, 2015 11:10:19 GMT
I'm surprised FS is 5th. For me SS is 1st then FS. I would be interested to know from others why you have put RS, MT and AC ahead of FS. I have money in RS but it's low rates (the recent cash back and consequential lower returns actually means I am withdrawing from this one at the moment and won't be putting back in until I can get 6+) means it is a lower priority, AC has too many suspended loans and MT insufficient opportunities.
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webwiz
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Post by webwiz on Aug 12, 2015 11:19:27 GMT
I'm surprised FS is 5th. For me SS is 1st then FS. I would be interested to know from others why you have put RS, MT and AC ahead of FS. I have money in RS but it's low rates (the recent cash back and consequential lower returns actually means I am withdrawing from this one at the moment and won't be putting back in until I can get 6+) means it is a lower priority, AC has too many suspended loans and MT insufficient opportunities. MT have been very good up until recently when the flow of loans dried up. FS have a strange mix of loans; maybe they would do better to concentrate on one sector. I only invest in their property loans. RS are relatively low risk, if also low rates. I agree with you on AC.
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Post by mrclondon on Aug 12, 2015 11:29:28 GMT
I'm surprised FS is 5th. For me SS is 1st then FS. I would be interested to know from others why you have put RS, MT and AC ahead of FS. I have money in RS but it's low rates (the recent cash back and consequential lower returns actually means I am withdrawing from this one at the moment and won't be putting back in until I can get 6+) means it is a lower priority, AC has too many suspended loans and MT insufficient opportunities. The lack of a secondary market on FS means I can not invest in most of the property loans as I am unwilling to hold the default risk at the point of maturity. I've invested in I think just 3 of their property loans where the valuation looks rock solid (e.g. Golders Green in London). Most of their property loans are mis-priced for risk IMO, at least for smaller lenders who can't stretch to the bonus levels. Yes, I know that is entirelly callous, as with a secondary market I would be offloading the risk on those who perhaps have less appreciation of the risk. Also as ramblin rose has pointed out on a number of occaisons, at present we are in the dark as to how effective FS will be in managing defaulted property loans, when experience from other platforms tells us there is a good chance a large proportion will default, and take years to realise the security. (And its worth noting I've taken a fairly major hit with a 30% capital loss on FS's Lubin art loan this year, and have had a number of lucky escapes where FS have covered losses.) EDIT: Yes both AC and TC have a whole raft of "suspended" loans, as does FS in its own fashion ( Caravan x 2, piano, bike, print, yacht etc). The first few FS properties have renewed without issue, but be under no illusion FS property loans will default and remain stuck in the loan lists for months and years thereafter
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SteveT
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Post by SteveT on Aug 12, 2015 11:30:07 GMT
FS would probably have been my next tick. Historic irritations were that some property loans took a long time to fill and draw down, paying no interest in the meantime, and that there was very little information given and none of it in advance. However, both of these have improved in recent weeks, with some of the property loans paying interest from a specified date (still not as good as SS / MT / AR though, where interest accrues immediately) and the ability to view loan information in advance. Think there is scope for improvement in management and communication of defaults.
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trevor
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Post by trevor on Aug 12, 2015 11:39:57 GMT
I'm surprised FS is 5th. For me SS is 1st then FS. I would be interested to know from others why you have put RS, MT and AC ahead of FS. I have money in RS but it's low rates (the recent cash back and consequential lower returns actually means I am withdrawing from this one at the moment and won't be putting back in until I can get 6+) means it is a lower priority, AC has too many suspended loans and MT insufficient opportunities. The lack of a secondary market on FS means I can not invest in most of the property loans as I am unwilling to hold the default risk at the point of maturity. I've invested in I think just 3 of their property loans where the valuation looks rock solid (e.g. Golders Green in London). Most of their property loans are mis-priced for risk IMO, at least for smaller lenders who can't stretch to the bonus levels. Yes, I know that is entirelly callous, as with a secondary market I would be offloading the risk on those who perhaps have less appreciation of the risk. Also as ramblin rose has pointed out on a number of occaisons, at present we are in the dark as to how effective FS will be in managing defaulted property loans, when experience from other platforms tells us there is a good chance a large proportion will default, and take years to realise the security. (And its worth noting I've taken a fairly major hit with a 30% capital loss on FS's Lubin art loan this year, and have had a number of lucky escapes where FS have covered losses.) EDIT: Yes both AC and TC have a whole raft of "suspended" loans, as does FS in its own fashion ( Caravan x 2, piano, bike, print, yacht etc). The first few FS properties have renewed without issue, but be under no illusion FS property loans will default and remain stuck in the loan lists for months and years thereafter
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Post by Financial Thing on Aug 12, 2015 11:47:50 GMT
mrclondon I suppose I should put on my hat and go sit in the corner now  Seriously though, apologies for my statement, it was far too vague and somewhat tongue in cheek. I didn't intend to scare anyone as I know little more than the garden gnome. I should clarify my statement on why I think SS is so very risky. 1. You are lending to Lendy rather directly to the borrowers and as I understand, there is no ring-fencing on your investment. If Lendy goes bust, who knows what would happen. I know nothing about the financial state of the company or their backing (no info. on the website). From SS's website, the 2 Board members of SS have degrees in Marine Engineering / eCommerce and Relations & Politics and other than that there is no further information. Compare this experience to the Board on a company such as Wellesley & Co, I consider this to add to the risk. So I think it is fair to surmise that handing over money to a company like this is high risk. As competition become more fierce and new P2P platforms are opening their doors, new loans are becoming less frequent meaning a company like this will struggle without a constant influx of new opportunities for investor to reinvest in (see Ablrate). 2. Nearly all new loans are property / land with higher LTV's. This mean lack of diversification. If the property market bursts or the economy struggles, defaults could be a major issue. Oh and not to mention you are being paid 12%. So yes, to me this is very high risk. But nothing will go wrong until something goes wrong.
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adrianc
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Post by adrianc on Aug 12, 2015 11:59:03 GMT
I suppose I should put on my hat and go sit in the corner now Or, of course, you could substantiate your allegations?
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james
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Post by james on Aug 12, 2015 12:01:17 GMT
I suppose I should put on my hat and go sit in the corner now Just have a tall chair in the corner and expound on the reasons for your concern. Your first post was too vague to support or refute. If you have reasons for having a particular view it should normally be fine to expound on them because a non-malicious mistaken view isn't something that would be regarded as libelous. Under the recently changed law in Great Britain a business would have to show monetary loss and that's not really a viable thing to do for a discussion on a message board. Even more so when the platform concerned has so much investor interest that it can't meet demand, so that even discouraging some investors wouldn't have the capability to cause a loss. You could probably discourage half of all current investors without it making the slightest dent in revenue in this specific case. And I see that you have now edited your post to give reasons.
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arbster
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Post by arbster on Aug 12, 2015 12:17:20 GMT
And I see that you have now edited your post to give reasons. I don't see any reasons...?
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james
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Post by james on Aug 12, 2015 12:25:57 GMT
a company like this will struggle without a constant influx of new opportunities for investor to reinvest in (see Ablrate). Certainly it would be good to see their airline pipeline unfreezing. Assuming that happens one of the interesting features of the platform is the relationship with a significant aircraft leasing firm, so that there should be long term capacity to meet lender demand profitably for all concerned. Ten to a hundred and up million Pound aircraft purchases could be quite interesting. Still, even without that I've lent many thousands there over the last few weeks, though with rather less diversification than I would prefer. Add in the other loan types that they do and it could be quite interesting, with every prospect of loan money values rising to a profitable for the platform level. At the moment the aircraft pipeline is suffering from the one or two big customer type of risk that can be quite common in newish business es and even established ones. I think that they are far from alone in that, with much of Money Thing volume coming from one source at present. Naturally both are well aware of this issue and working on it, even if we'd all like progress to be more rapid than it can at times be. Fortunately neither has large stock to buy that they might be stuck with in the classic small business expansion failure scenario. It's good to be aware of such dependencies and other relationships since they can be quite significant and very positive or negative for the businesses concerned.
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james
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Post by james on Aug 12, 2015 12:32:38 GMT
And I see that you have now edited your post to give reasons. I don't see any reasons...? There was a followup post that was posted originally with the go into the corner comment then expanded to give the reasons. I wasn't referring to the original one, though that one has also been edited to remove a piece of text that could have been misinterpreted to mean time proximity to default of the platform rather than time proximity of default risks that are in any case ever-present in one form or another for small businesses. Being robust in the face of such risks is just part of normal business planning and I'm sure that the platform and others are considering such factors.
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jonno
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Post by jonno on Aug 12, 2015 12:53:45 GMT
mrclondon I suppose I should put on my hat and go sit in the corner now Seriously though, apologies for my statement, it was far too vague and somewhat tongue in cheek. I didn't intend to scare anyone as I know little more than the garden gnome. I should clarify my statement on why I think SS is so very risky. 1. You are lending to Lendy rather directly to the borrowers and as I understand, there is no ring-fencing on your investment. If Lendy goes bust, who knows what would happen. I know nothing about the financial state of the company or their backing (no info. on the website). From SS's website, the 2 Board members of SS have degrees in Marine Engineering / eCommerce and Relations & Politics and other than that there is no further information. Compare this experience to the Board on a company such as Wellesley & Co, I consider this to add to the risk. So I think it is fair to surmise that handing over money to a company like this is high risk. As competition become more fierce and new P2P platforms are opening their doors, new loans are becoming less frequent meaning a company like this will struggle without a constant influx of new opportunities for investor to reinvest in (see Ablrate). 2. Nearly all new loans are property / land with higher LTV's. This mean lack of diversification. If the property market bursts or the economy struggles, defaults could be a major issue. Oh and not to mention you are being paid 12%. So yes, to me this is very high risk. But nothing will go wrong until something goes wrong. Oh!! for God's sake 
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Post by mrclondon on Aug 12, 2015 13:36:59 GMT
In the midst of what turned out to be a non-story from optionstrader, I'm sure I will not be the only one that has overlooked a significantly more important post on platform longevity - westonkev's bump yesterday of my thread of a few months ago concerning the future of the Relendex platform.
He was quite correct to say submission for FCA compliance during Q3 is very likely to shake out a few players, just as the initial authorisation process did with Squirrl and Encash/Yes-Secure deciding to close at that point.
Another platform we rarely discuss on this forum is Money&Co, the Nicola Horlick fronted platform. Whilst the obvious risk with that platform is NH herself (a marmite persona), and I suspect that factor alone puts off most forumites, there must be more reasons why Money&Co doesn't get a mention on threads such as this.
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Seriously though, apologies for my statement, it was far too vague and somewhat tongue in cheek. I didn't intend to scare anyone as I know little more than the garden gnome.
