The shape of things to come

Btw I was told that there will be a tsunami of E loans on their way on to the platform.  This was in response to the concern I expressed about the likely detriment to my average interest rate from the change from auction to a fixed rate structure.  I was told that have been initially conservative in E loan listings, but now that it has been bedded down, a lot more volume will be coming through and it is expected that few will close very early due to quick fill.  So be warned.......

I have done back of the envelope calcs and concluded that the returns are better for flipping A+s (circa 10-11% net) vs 9-10% net for holding a diversified E loan portfolio, but the former is a lot more time consuming in terms of constant churn.  So unless you run a bot / script, flipping A+ is a lot more work for a circa 1% improvement in return.  If you were going to invest a lot of time flipping, flipping E loans would be a better use of time.  

One positive outcome of the transition to fixed rates is that I expect the fixed rate for E loans will be higher than the current MBR so maybe a diversified E loan portfolio is the way to go.

I've been aiming for low risk or high yield (in the A/A+ bands) and with the decreased amount of information provided for SME loans I've bought into hardly any in the last 6 months. If FC are going for fixed rates, I'll have to change the loans I target for study; if they reduce the transparency any more I'll be out of the SME market. Trouble is no-one else has the volume of loans to maintain a diversified portfolio, unless anyone can tell me otherwise.

Probably introduce more institutional money into the marketplace.

Those who were not invited to discuss the change with FC should not feel left out. Those who were contacted were not being consulted - the decision had already been made. Nor were they being given privileged information which would give them advantage over others - FC are not going to trust lenders with important secrets. An educated guess is that the purpose of advising some lenders of the forthcoming change is that it is just communications management. Selecting certain lenders who are active in the FC community with the intention of preparing the community for the change, rather than having the disastrous response which greeted the introduction of MBR in 2013, and which caused the change to be withdrawn. FC will select 'opinion formers' to speak to, to brief those who might support the idea, and perhaps mitigate the response of some who might react adversely. I do not think the request to keep it secret was intended to be effective - rather FC wish to know how we respond in advance of making the announcement.
All good, professional communications management. 

There is of course the underlying truth that FC simply don't want to invest anymore money in the server hardware and software to support continued expansion. The recent issues are merely a symptom of a failing hardware platform. So by removing much of the investor interactive activity the platform can be handed back to the slippers and pipe brigade from Zopa, where investing on FC isn't too taxing on the grey matter. Its win win for FC, whilst spitting in the faces of those who helped grow it to what it is.


A sad day indeed and time to pull the cash to go elsewhere.........


Samir....you have personally let down so many of the investors who have down with you - through good times and bad. I guess your twitter messages about a broken platform will cease now and you'll have nice cozy evening to count the £££'ssssss without feeling the need to invest further in hardware and software......nice one, a classic "tail wagging the dog" story.