Liz
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Post by Liz on Feb 23, 2016 9:46:12 GMT
It sounds like we should abandon p2p, with all the risk defaults, poor communication etc, and this is relatively benign times.
The problem is 2% in a bank is just so low, at 5% I might take the risk free option.
I'm up over 20% in p2p, so maybe I can afford to take a few risks.
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Balder
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Post by Balder on Feb 23, 2016 10:04:52 GMT
It sounds like we should abandon p2p, with all the risk defaults, poor communication etc, and this is relatively benign times. The problem is 2% in a bank is just so low, at 5% I might take the risk free option. I'm up over 20% in p2p, so maybe I can afford to take a few risks. Hey Liz you should write a book, 20% - I'd buy one.....
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Post by lynnanthony on Feb 23, 2016 13:02:14 GMT
I'm up over 20% in p2p, so maybe I can afford to take a few risks. Over what period?
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markr
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Post by markr on Feb 23, 2016 20:39:34 GMT
I'd suggest ignoring the complaints and trying SS again. I had considered it, and I may come back some time, but like a few others here the 12% seems a little too good to be true.
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daveb4
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Post by daveb4 on Feb 24, 2016 7:16:35 GMT
I'd suggest ignoring the complaints and trying SS again. I had considered it, and I may come back some time, but like a few others here the 12% seems a little too good to be true. True 12% is high and affordability could be an issue - for developers though this is not expensive as although rates high there is no hassle from a retail bank which takes hours of their time and other 'extra' costs that are involved. I see one of the main risks here is obviously trading businesses and some platforms like SS maintaining control and spending more time over the potential risk of loss accounts - eg in SS case the need to sort their days overdue out - as far as FCA are concerned surely platforms need to show at least that they are trying to do something about it and I think more platforms need to put more time into this side of their control. Too many like FC just do not seem to care about bad debts or their borrowers and just let businesses go. A last point which has been discussed on other links is there should not be too much of a problem as long as the platforms are making money! Can they survive just on arrangement fees and or a turn on interest charged direct to the borrower. Do they need to charge for secondary market? or set up separate type of accounts (AC) where they can make a bit of a turn on rates for easy to run type of account. Surely this is all why some of us prefer some sites to others and that there is room for various platforms trying to have separate USP's?
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Post by jackpease on Feb 24, 2016 8:59:21 GMT
A last point which has been discussed on other links is there should not be too much of a problem as long as the platforms are making money! Can they survive just on arrangement fees and or a turn on interest charged direct to the borrower. Do they need to charge for secondary market? or set up separate type of accounts (AC) where they can make a bit of a turn on rates for easy to run type of account. It'd be great to have a separate thread on this and get it on the record! Who can actually make money out of this if the markets freeze up? Isn't this the six million dollar question - when people say 'FC is low %, I'm out, and SS is high %, I'm in' or 'Ratesetter has annoyed me, I'm out' there seems to be little assessment of the bigger picture. As I understand it Funding Circle charges us 1% on all borrower repayments - so even if there was a crash and new lending dried up, and secondary markets froze, then FC would still get income to pay its staff. I am not sure that is true elsewhere where it seems that platform funding depends on growing the loan book - which is not assured. Jack P
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locutus
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Post by locutus on Feb 24, 2016 9:09:36 GMT
A last point which has been discussed on other links is there should not be too much of a problem as long as the platforms are making money! Can they survive just on arrangement fees and or a turn on interest charged direct to the borrower. Do they need to charge for secondary market? or set up separate type of accounts (AC) where they can make a bit of a turn on rates for easy to run type of account. It'd be great to have a separate thread on this and get it on the record! Who can actually make money out of this if the markets freeze up? Isn't this the six million dollar question - when people say 'FC is low %, I'm out, and SS is high %, I'm in' or 'Ratesetter has annoyed me, I'm out' there seems to be little assessment of the bigger picture. As I understand it Funding Circle charges us 1% on all borrower repayments - so even if there was a crash and new lending dried up, and secondary markets froze, then FC would still get income to pay its staff. I am not sure that is true elsewhere where it seems that platform funding depends on growing the loan book - which is not assured. Jack P Some good work done here: p2pindependentforum.com/thread/4048/comparative-p2p-platform-performance-2015It would be good to get it stickied.
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Post by jackpease on Feb 24, 2016 9:32:30 GMT
That seems to focus really well on how they are functioning in buoyant market - but after a market shock with limited new loans/loan sales/loan purchases?
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Post by chris on Feb 24, 2016 9:37:53 GMT
A last point which has been discussed on other links is there should not be too much of a problem as long as the platforms are making money! Can they survive just on arrangement fees and or a turn on interest charged direct to the borrower. Do they need to charge for secondary market? or set up separate type of accounts (AC) where they can make a bit of a turn on rates for easy to run type of account. It'd be great to have a separate thread on this and get it on the record! Who can actually make money out of this if the markets freeze up? Isn't this the six million dollar question - when people say 'FC is low %, I'm out, and SS is high %, I'm in' or 'Ratesetter has annoyed me, I'm out' there seems to be little assessment of the bigger picture. As I understand it Funding Circle charges us 1% on all borrower repayments - so even if there was a crash and new lending dried up, and secondary markets froze, then FC would still get income to pay its staff. I am not sure that is true elsewhere where it seems that platform funding depends on growing the loan book - which is not assured. Jack P AC has on going fees from the borrower that are typically in the 2% region after broker fees are paid, so if needs must costs could be slashed and the company run just on those fees. If we can improve our efficiency a bit as we scale those fees would eventually cover the running costs of the business, with any other income either being profit or reinvested into growing the business - something that could be more easily cut if our growth stalled. By charging the borrower instead of the lender this also means it does not negatively affect the lender's tax position.
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james
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Post by james on Feb 24, 2016 9:56:30 GMT
While I've yet to leave a platform in haste, there are two where I'm currently winding down investments:
1. Zopa: Returns, repeated breaches of law and regulation over the years. I don't think they ever gave me a correct annual loan statement as a borrower on the first try. Bonus points for overcharging me interest on the loan and for their former CEO joking negatively about my participation in the last of a particular type of loan as a lender in a public online place, when most of the return for the lending would come via a lottery, hence causing me to have reason to wonder if I actually did have a chance of getting that return. Calculation errors still seem to be ongoing after ten years, though at least the size of the errors seems to be decreasing and some tougher fix work seems to be ongoing recently. Maybe FCA-related auditing has helped, if it was a factor. All amply discussed here in the past. Yet in spite of this I would lend if I thought returns and such made it sensible because I do have broad confidence in their practices, particularly with relation to underwriting, and in various aspects other than returns they seem better than their leading competitor, notably not charging the full protection fund cost up front now in a way that penalises early repayment and having a possibly less costly loan sale calculation approach.
2. Bondora. The only platform I tell people they should not use when returns aren't the main reason. I don't trust them to accurately describe loans, whether and how rating for risk works, or to act properly with regard to correcting errors after they have repeatedly got those wrong, including as recently as a few months ago. A particular joy was them writing some years ago that they adjusted interest rates for risk then recently writing that for the period concerned they weren't rating loans for risk. And of course this has already been widely discussed here before now, aside from the past rating bit which I'll look up if desired by mods, though it might have vanished with their forum.
Lest anyone wonders, I reported this post to the moderators inviting them to ask for more details if they weren't already familiar with the issues mentioned, though they should be given past discussions here.
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mv
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Post by mv on Feb 24, 2016 10:30:01 GMT
RS- bored (I know that is meant to be a good thing)
FC- rates and liquidity (without selling at a discount)
Money&co- very long auctions not filling.
High risk but just using MT and SS now
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Post by bonfemme on Feb 24, 2016 10:59:30 GMT
You don't consider TC to be a major site then? I don't think any one has mentioned leaving it? Don't get me started, I'm leaving it. Too many loans defaulting, very poor recovery rates in so called secure loans, terrible unworkable SM, SM cost, poor website, near zero communication, especially on problem or loans with missing payments, sponsor conflict of interest etc. One loan recently concluded, SME loan secured by property(2nd charge) has left members with a 75% capital loss. Another 18% recovery, and we are yet to see a penny, and doubt we will, as this payment is from a PG. Others in default, where recoveries are very pessimistic. I agree totally with Liz regarding TC. Terrible communication. My experience has been very poor. I am virtually out now so don't know how things are currently managed, but when I joined, it was an absolute shambles. I have one 12-month loan that should have been repaid in September 2012. No principal has been repaid at all, and only nine months' interest has been paid. As far as I know, it hasn't even been defaulted.
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adrianc
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Post by adrianc on Feb 24, 2016 11:12:25 GMT
Has LC been mentioned yet...?
Where to start? I'm not alone in waiting for the 12mo of the toe-dip intro offer to expire, so I can take my very generous 15% free money - plus whatever's actually been earned - and escape.
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Feb 24, 2016 11:52:31 GMT
I'm not sure it is fair to single out SS for that particular criticism. The same point could be made about any P2P provider. The winning formula I was referencing is the one to attract and retain new lenders - something they have clearly excelled at. I think SS's model is particularly risky. It is paying lenders interest from day 1 and it is offering a provision fund as well, all of which must come out of the spread between what it is receiving from borrowers and the already high headline rate of 12% paid to lenders. It is hard to see how SS is managing to source enough borrowers in the face of competition from cheaper lenders/platforms, but it won't be by being picky. My guess is it's probably paying top commissions to introducers as well. When there is a downturn in the property market I expect the emperor will be found to be wearing very few clothes. Just my opinion, of course. As lenders, we see SS saves costs by running a simplified platform. I think the same applies on the borrower side as well. It saves a lot of time when you collect all the interest upfront and distribute it to lenders once a month. Generally they choose experienced developers and fund larger projects than other platforms. The average loan size is over £1m and 30% of those are to the same borrower's, bring the average borrower size close to £2m. I don't see any other P2P platform that is so well streamlined. By keeping the business overheads low, SS can maintain a 12% rate to lenders and that means they can keep funding ever larger loans. Other platforms struggle to fill large loans, so they have created a space which has less competition. The Pipeline loan size average is £3.7m, with the average borrower size being over £4m. Even SS might struggle to fill all those if they went live next month, but with a wall of ISA money arriving in April, it looks like SS are ready for further expansion. By maintaining the average LTV below 60% I have full confidence in the SS model.
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webwiz
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Post by webwiz on Feb 24, 2016 12:38:12 GMT
I think we should treat the high interest paying platforms like junk bonds. Expect a proportion of loans to fail but through diversification make enough from the ones that don't fail to cover the ones that do. I invest in loans backed by independently valued assets and, barring fraud, any loss should not be too severe given reasonable LTVs and, in some cases, a provision fund. I also prefer loans with shorter terms so in the event of a major recession causing multiple failures there is a chance of getting out before too much is lost. I'll let you know in 5 years whether my strategy was successful  |
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