Where do you think your money is safest?

On most of these accounts you have to have 2 active Direct debits each month and on almost all of them you have to pay in a substantial sum each month, although you can cycle the same sum around it takes a bit of organisation. The incentive is there to attract new customers to switch their main account and they are catching on to rate tarts like me and making things harder.

Lloyd club (5k @4%) needs DDs which are used. Easiest way to get them is via a tesco internet and instant savings account... Both can have several regularly 'paying' DDs set up.

For accounts with interest, a SO chain, or set of pairs works nicely. You don't worry about it as all are moving less cash than they always have in them. For accounts with less interest reasons such as Halifax reward or hsbc advance, manual steps or loss of interest is required. Still, only a few mins per month.

Perhaps now is not the time to say this (with the additional work forum members think they have to do to optimize returns), but wow. Members really do like to work hard and squeeze every penny. It's amazing when you compare this effort to the £billions left in zombie accounts.

Anyways, another interesting point from this vote. If you presume that a few active staff members from the platforms haunt these web sites, why do some platforms get zero votes. Does nobody from these platforms consider their site low risk, or can even be bothered to vote or participate on the forum?

I know lots of RateSetter employees read the forums, but never comment as they don't want to be tagged. But they probably at least voted.

westonkevRS

Wondering if 'zombie accounts' refers to money left in 0.1% high street bank accounts or forum member accounts held by RS staff who never post.

Hi Everyone at RS

Surprised to see significant votes for SS and Wellesley, both of which I have rejected because I see them as too risky.

The problem with model based estimates of default risk (and presumably recoveries?) is that none of the platforms has been through an interest rate cycle. How sensitive are the businesses and people we are lending to to a rise in interest rates (of 1%, 2%, 4%, 8%)? How much does amortisation and the ability to sell off mitigate this risk? Similarly, whilst diversification by business / consumer / location etc is good, how much correlation risk is being run?

How well do any of the models used by the P2P industry actually model this? At the moment I don't think we have any basis for concluding an answer to that question.

You can take some comfort in default rates being lower than platform predictions, but I wouldn't take too much comfort in it. I'm actually getting more nervous about the "securitisation" approach that some platforms take. Whilst it might vary to a degree, essentially they are:-

Modelling
Originating
Warehousing
Approving
Distributing
Managing client funds
Unprofitable / low profitability
Little to no skin in the game
Making (hopefully) enough money to be profitable

If default rates spike for some reason how well will any provision fund cover losses?

That's more concentrated "function risk" than we saw with banks, credit rating agencies, Fannie and Freddie, sub-prime and CDOs prior to the credit crunch.

To be fair though there are some important differences - no leverage, no synthetics, no repackaging of debt that's been repackaged, perhaps less concentration risk, perhaps better security, perhaps no NINJA loans and they ARE disintermediating the banks, providing us with better returns (currently) and borrowers with better rates.

I guess the acid test is whether or not I have money on those platforms. The answer is yes, I do, but I am continually challenging my own view that they are safe enough given the returns on offer.

Cross-posted from an FC forum post I just made because it soon became apparent that I wasn't solely talking about FC .