When do AC ever charge default interest? If ever.

Thanks for this interesting list

The Lending Agreement is very clear - if you are behind with a payment you will pay default interest rate until you catch up.  Full stop.

Any agreement can be varied if both parties agree - my moan is that AC now seem to be in the habit of waiving this from the outset, even in the case of a badly behaved borrower (M******* WT), and without telling lenders.

Wit M*****WT Lenders were not told that by voting to vary the agreement the right to enhanced interest was being waived.  What we were told was (sort of redacted version):

The borrower has asked that full payment of the £nnnnn be delayed until the payment due on dec . In the interim he will make the following payments:-
Interest payment due on sept
£ nnnnn smallish capital payment to be paid on sept
Full capital and interest payment due on oct
Full capital and interest payment due on nov
Full capital and interest payment due on dec plus remaining £nnnnn also to be paid on that date. (ie bringing the loan back to schedule)

Nowhere does it say that lenders are due enhanced interest for that 3 months period but we are feeling erm, something, so foeget it, instead just ignore that bit.  Which is what my vote was seeking, if they do think there are reasons for forgivness then say so, explain, and fine, lenders are informed when they vote.  But they don't, so they are keeping lenders in the dark and essentially making the decision for them.

What is unfair about applying the agreement?  It is not sneaky small print it is easy to understand and in fact it is fair on both parties, and it is what other platforms do.  It is extraordinarily unfair to lenders not to explain this is a consequence of your proposals (not just the 10% of lenders who come here who will be sick to the back teeth of this)
Further you just did apply default interest on an straightforward loan extension less than a week ago, so you can do it when you put your minds to it.

Deja vu, n'est-ce pas?

"The quality of mercy is not strain'd,
 It droppeth as the gentle rain from heaven
 Upon the place beneath. It is twice blest:
 It blesseth him that gives and him that takes."

I for one don't usually want my (legal) pound of flesh - the exception being where there has been deception or dishonesty.

I really fear for P2P. When I first started investing it had various names, but one was social lending - some sort of hippy let's all help each other out and poke banks in the eye. That was never my way, I always expected a decent return for the risk I was taking. Now many on this forum seem to be more like some nasty budget airline. Hook them in with some cheap offer, but then charge them extra if they forget to print out all 10 pages of the emailed ticket or want to use the toilet outside their designated slot.

Already I have seen many lenders behave much worse than the banks ever did. At least they have tried.

I am not an AC shareholder. I am a lender. I have a number of concerns about AC, mainly that they over promise in general and with deal flow in particular. For this reason I have significantly reduced the amount I have with them over the last few months. If deal flow emerges at anything like the quantity promised I might well return (assuming that I have some spare money). But I hope that we are able to treat borrowers, who behave reasonably, reasonably. If we can't then I'm off for good. 

 If the original question posed had asked whether we wanted to  be a Shylock, I would be surprised if anybody had answered in the affirmative.  Yet that is really what the question is about.  I think some people need to re-read Shakespeare's play and reconsider their philosophy. 

This all assumes everybody is familiar with Shakespeare - probably a false assumption for these times.

One very final point (breaking my point of not commenting again).  The borrower has the right in the agreement to ask to reasonably vary the loan.  In the same clause, the lender has the right to reject the variation.  I know this because I wrote our loan agreements and know them intimately.  What is reasonable is subjective in law and it has also been suggested we don't have to abide by the FCA directives on TCF because the borrower is corporate.  The FCA take one view, if you have the TCF values built into your business for consumer loans, then these should apply to ALL loans regardless of whether the borrower is consumer or corporate.  We have a strong TCF ethos in the business and this applies across all our customers.  Fairer, growth, together.  Everyone, be they a lender, borrower, shareholder or the cleaner, is treated fairly.

Default interest is only payable if the loan defaults.  Agreeing to vary is not a default.  Ergo, default interest can not be charged. This is a clear legal point.

The requests made were to vary the loans at the same interest rate and we felt this was reasonable given the information we had, so put this to the lenders.  Lenders have agreed, in the overwhelming majority, to accept the variation put forward.  The alternative was to let the loan default.  This can have terrible knock on effects as in most loan agreements there are clauses that say a default with another lender is also a default with the issuing lender.  Thus a domino effect happens, and in the worst case kills a business.  You only have to look at the cases Lawrence Tomlinson put forward where banks forcing a default by not allowing a reasonable variation killed businesses because this forced the hands of other lenders.  Is that what you want the lenders of AC to be known for?  Killing businesses unreasonably?

We are often portrayed by a minority as being incompetent yet my credit team has over 150 years of experience in lending, we have an Insolvency Practitioner in the business, we have an insolvency lawyer in the business and I have spent a quarter of my career in that environment.  I wrote our loan agreements with our lawyers, DWF.  I know what they contain and what they can and can't do.  If you feel that I am not doing my job properly, then I will shut up shop and go back to being employed somewhere.  However, out of 10,000 lenders around a third are very active with us (their accounts show activity at least every 10 days) and half are active at least once a month.

I want to state very clearly, in all these cases the vast majority of lenders have voted for the variations.  A small number have voted against and a tiny number have complained.  Our T&Cs are very clear, we go with the majority vote.  Taking a public pasting for enacting a course of action that the majority of lenders are 100% happy with demoralises my team.  This is the same team that has worked hard to get full 100% recoveries on FF, E-T, HBL etc and working hard to do the same on others.  the same team that has a credit track record of 0.9% total losses or expected losses on the whole book (0.35% annualised), and is achieving on average above 10% pa return for lenders.

Right, I'll get back under my rock.