New P2P Structure - T & Cs for review

A lot of people were happy to moan about the current structure. Many have mentioned this but seems the new structure moves more pressure, due diligence on to lenders and at the point of late and default payment less incentive for SS to react strong and fact (as they have done).  

I for one was happy with the current setup. 

Hopefully the attitude and approach of the small SS team doesn't change but..........who knows. 

Have to say I agree.
Such a simple system hence why so popular.  With prefunding and the trust structure most of the risk seems to be on the lender. Does SS actually have a % of their own funds invested in loans anymore? 

Maybe minority on this forum but as a whole I think everyone preferred the simpler saving stream.  Too many cooks spoil the broth.......

I'm one of those who will be happier for my risk exposure to be compartmentalised by individual loan, and will be lending more of my total P2P portfolio via SS as a result. However I don't believe there should be significant concern that Lendy will now become less committed to ensuring that loans are robust and that confidence in SS as a whole is maintained. Lendy makes money when its lenders make money and the way for Lendy to make the most money is to continue in exactly the same mode as it has to date, whilst scaling progressively and taking a greater share of the commercial bridging market. The fastest way for Lendy's future earnings growth to be undermined is to start letting "bad loans" onto the platform and seeing its lenders incur losses on defaults.

Lawyer-drafted T&Cs always read very black & white and, superficially, can sound like all risk is being thrown over the fence and hands washed of the consequences. In reality, Lendy have plenty of skin in the game; their entire business model relies on SS continuing to be successful, which in turn relies on a good number of large-scale HNW investors having the confidence to stake substantial sums in the loans that they bring forward. My investments in each SS loan are chicken-feed by comparison (although they'd make a significant dent in my projected returns if they start to suffer capital losses) and I'm very glad that recent developments (pre-funding, etc.) show that SS still regards smaller lenders as being important too.

Their due diligence will continue to be good, as stevet says.  Essentially what Lendy Ltd has at stake remains broadly the same - their provision fund and their livelihood.  Under both models, if they sustain massive losses through defaults the platform effectively fails, their provision fund is exhausted and lenders lose money.  The difference is that the post-failure fallout is slightly less painful for people who invested only in the non-defaulted loans.

Whilst I understand the minority viewpoint of "if ain't broke why change ?", I'm glad the days of lenders piling into loans on SS without really thinking the risks through might be over.  You've only to read the posts on the PBL54 thread to see the power of crowd due dilligence. In the extreme the underwriter(s) will be left with big chunks of unpopular loans (for those on AC over 12 months ago, think handbags !) and that will tend to moderate any tendency for Lendy to increase the risk appetite during loan assessement. 

I have been become increasingly concerned at people ("newbies") piling money into the higher risk  p2p loans (I'll define that as anything yielding > 7% by way of illustration) without the experience or knowledge to be able to evaluate risk. I appreciate this line of reasoning goes both ways - the new model means more lender due dilligence is sensible and newbies may not be good at it, but on the other hand the new model may cause more to pause before throwing their ££££ into the pot.  The outcry from "unsophisticated" lenders when the capital losses start on SS (as they surely will at some point) mustn't be allowed to shake confidence in the whole p2p sector.

Personally I'm far happier to take my share of the capital loss on loans I'm in than to risk a couple of big loan failures leading to the platform folding.  I have had far more with SS than has been sensible under any form of objective risk analysis, so this change will make little difference to my SS balance, but I will sleep a little easier.

Well, I didn't actually want it either, but I'm not about to throw my teddy out the pram just yet.

I always assumed that were there large losses under the existing system and SS (or possibly a receiver) were in charge those lenders in the failing loans would be the ones to feel some pain, so I still did DD and diversified. Admittedly I may be more thorough on the DD now as the situation is legally crystal clear, but I lend nearly ten times the amount on SS than I do on for example AC where I feel diversification and DD is still required so I guess it should be worth the effort for me.

I don't for a minute think this will dilute SS's approach, as SteveT said it's just not in their interests. I would also want to see a long term future for SS so I hope all those braying for this change will put the proverbial money where their mouths were   . I still believe, as I did before that the real test of SS will come when one or some of these larger loan go bad, in the meantime I will continue much as before.