jlend
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Post by jlend on Nov 3, 2015 3:05:25 GMT
Thinking about this more and speaking with other large lenders (that have actually joined RateSetter), perhaps it isn't such a bad idea. Personally I prefer to increase the Provision Fund rather than the RMM ltd bank balance, as my reputation rests with the credit and fraud risk of our retail lending (not commercial or real estate, these aren't my areas of expertise). But this will always be a balancing act. Ultimately some independent members could provide some additional challenge, not just in terms of deciding resolution events but also aspects such as the validity of claims on the fund (i.e. some business expenses are claimed) but also the calculation of surplus/deficit methodologies. Let's see. @ westonkevRSThere are other examples where trustees work well in my experience. For example trustees that provide a level of over sight for charities. Perhaps i am a bit strange... as a project manager i like it when auditors come and review my projects. I think the opportunity to receive feedback is good as westonkev highlights. That is not to say i always agree with the feedback or choose to act on it all. If ratesetter does increase the number of trustees i wouldn't expect ratesetter to act on all the challenge from the trustees ☺
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jonbvn
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Post by jonbvn on Nov 3, 2015 22:19:49 GMT
Just some anecdotal info, but I have noticed that myself & OH have received a lot of "early repayments" recently. E.g. 2 each today.
TBH, I am quite pleased about this, since we are looking to diversify out of RS into some other P2P offerings. This just pre-empts that.
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jimc99
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Post by jimc99 on Nov 3, 2015 23:01:32 GMT
Kev...You say some business lenders are getting not only compensation for defaulted loans but are claiming for BUSINESS EXPENSES as well!!! Why? When the payment of defaulted loans from the Provision Fund is automatic!! What "expenses" do they have!! Whoever is agreeing to such things inside RS needs a kick up the arse. Any other things going on that you have concerns with? The Provision Fund is a key attraction of RS for me and if its being abused or run down by similar shenanigans I would like to get my money out sooner rather than later!
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jonbvn
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Post by jonbvn on Nov 4, 2015 0:31:08 GMT
Kev...You say some business lenders are getting not only compensation for defaulted loans but are claiming for BUSINESS EXPENSES as well!!! Why? When the payment of defaulted loans from the Provision Fund is automatic!! What "expenses" do they have!! Whoever is agreeing to such things inside RS needs a kick up the arse. Any other things going on that you have concerns with? The Provision Fund is a key attraction of RS for me and if its being abused or run down by similar shenanigans I would like to get my money out sooner rather than later! I don't think business lenders are claiming expenses. However, there may be claims against the PF for business expenses by third parties.
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jimc99
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Post by jimc99 on Nov 4, 2015 2:34:03 GMT
Okay but why would third party claims come out of the lenders PF?
Hope its not RS themselves using the PF monies to pay for its administration. Getting to the point where nothing much surprise's me unfortunately.
Kev will hopefully make things clear....
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Post by westonkevRS on Nov 4, 2015 6:58:47 GMT
Kev...You say some business lenders are getting not only compensation for defaulted loans but are claiming for BUSINESS EXPENSES as well!!! Sorry, wrong choice of words. It isn't used for generic business expenses, some costs are paid by the fund that are related to bad debt, for example court costs or one-off collections issues. These are actually relatively small in the scheme of things, and tracked on a report that I have access to. I'll think a little more before using my words in the future.... Maybe I need brand training. Kevin.
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Post by westonkevRS on Nov 4, 2015 7:02:14 GMT
Okay but why would third party claims come out of the lenders PF? Hope its not RS themselves using the PF monies to pay for its administration. Getting to the point where nothing much surprise's me unfortunately. Sometimes I need to think which words I use. The expenses are small and specific to Collections. They are quite a mixed bag. I don't want to discuss third party contracts, but external direct cost of recoveries is not paid by the PF. Staff costs are paid by RateSetter. I'm not going to go into a line by line breakdown, but the costs are small. Kevin.
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jlend
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Post by jlend on Nov 8, 2015 0:08:34 GMT
Okay but why would third party claims come out of the lenders PF? Hope its not RS themselves using the PF monies to pay for its administration. Getting to the point where nothing much surprise's me unfortunately. Sometimes I need to think which words I use. The expenses are small and specific to Collections. They are quite a mixed bag. I don't want to discuss third party contracts, but external direct cost of recoveries is not paid by the PF. Staff costs are paid by RateSetter. I'm not going to go into a line by line breakdown, but the costs are small. Kevin. We've all written things in haste that could have been worded better :-) A level of independent oversight of the fund would mean someone else could highlight things like the expenses, however small, for discussion. It is only natural that there will be some conflict of interest when the two trustees of the provision fund are the founding directors of ratesetter, although i don't doubt their integrity as the strength of the provision fund and ratesetter itself are so closely linked - as is their passion for a better alternative for lenders than normal bank savings accounts. In an interview Rhydian said the provision fund is "owned by the lenders", and "lenders are the beneficiaries" which got me thinking. There will come a day when one or both of them leave, it would be nice for lenders to have some input on what happens to their provision fund :-) There may well be a step change in the size of the provision fund when P2P ISAs are launched. Perhaps that is an opportunity for assessing any potential changes to the trust arrangements, including a level of oversight from lenders, however limited.
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bigfoot12
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Post by bigfoot12 on Nov 8, 2015 16:07:21 GMT
It is only natural that there will be some conflict of interest when the two trustees of the provision fund are the founding directors of ratesetter, although i don't doubt their integrity as the strength of the provision fund and ratesetter itself are so closely linked - as is their passion for a better alternative for lenders than normal bank savings accounts. More transparency is always good, but it isn't obvious that a lending member is definitely an improvement. I think that in most circumstances of the provision fund failure then Ratesetter would also fail, so I don't think there is much of a conflict between the fund and RS.
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Post by westonkevRS on Nov 9, 2015 6:34:12 GMT
This is the RateSetter same thoughts. Whenever this split (between the Provision Fund and RMM Ltd) is discussed it's pointed out that really there is no difference. Without the Provision Fund there is no RateSetter, so it will always be the priority to try and ensure sufficiency through the cycle capital.
Remember though, Capital at Risk. The Provision Fund is not a guarantee, it is an attempt to reduce risk that has to date been 100% successful for both capital and expected interest.
Kevin.
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pikestaff
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Post by pikestaff on Nov 9, 2015 8:32:57 GMT
Okay but why would third party claims come out of the lenders PF? Hope its not RS themselves using the PF monies to pay for its administration. Getting to the point where nothing much surprise's me unfortunately. Sometimes I need to think which words I use. The expenses are small and specific to Collections. They are quite a mixed bag. I don't want to discuss third party contracts, but external direct cost of recoveries is not paid by the PF. Staff costs are paid by RateSetter. I'm not going to go into a line by line breakdown, but the costs are small. Kevin. westonkevRS - When I first read this I did not like the sound of it at all. I had assumed that the PF would bear all the cost of recoveries, and would be funded at a level to enable it to do so, because RS will no longer be there to pick up the costs if it fails. But then I realised that I might not be seeing the whole picture. At the moment, RS is paying for recoveries out of its margin on the good book. Following a Resolution Event, if RS is no longer around, will whoever is appointed to run down the book continue to pay for recoveries out of the margin? If so, can you comment on how confident you are that the margin will be sufficient? (My guess is that, other things being equal, it should be more than sufficient because expensive activities like marketing will have ceased. But other things may not be equal...)
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elliotn
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Post by elliotn on Nov 9, 2015 8:54:46 GMT
So what does a lender see? An "early repayment"? Yes. For lender portfolio transparency it would be better to distinguish between borrowers repaying early and PF reimbursing for those borrowers paying late (or not at all). Kev?
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agent69
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Post by agent69 on Nov 9, 2015 9:22:47 GMT
Just some anecdotal info, but I have noticed that myself & OH have received a lot of "early repayments" recently. E.g. 2 each today. I've had 3 over the weekend, which is about the same number as the last 6 months. Wonder what is going on
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Post by nutfield on Nov 9, 2015 9:24:18 GMT
Not sure this would add very much. The overall size of the provision fund in relation to the size of the outstanding lending book would seem to be more useful.
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Post by westonkevRS on Nov 9, 2015 12:46:52 GMT
For lender portfolio transparency it would be better to distinguish between borrowers repaying early and PF reimbursing for those borrowers paying late (or not at all). Kev? This'll never happen. In the scheme of things it isn't important and we don't want to worry Mrs Jones at 33 with default emails. The RateSetter offering aims to be simple. For dedicated lenders it's the overall portfolio statistics that matter, rather than the luck of one of your personal loans defaulting. These statistics are on the web site and can be downloaded from AltFi.com Kevin.
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