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Post by rebsrep on Mar 11, 2016 20:11:38 GMT
In light of the recent run of defaults, we have taken significant steps to make our process’s more robust in addition to the usual ongoing improvements. For example:
• We are currently recruiting an in-house recoveries manager to reduce the overdue payments
• We are trialling a new firm of solicitors that specialise in B2B SME Debt Recovery on 2 of our loans that are in recovery management.
• We have added a Credit Risk Referrals Committee for any loans over a certain threshold and for any loans that any of the senior team believe should have a second opinion before listing.
• We are seeking the input of at least 2 external banking risk experts that have their own risk model to trial with our data to see if it produces the same or different results.
• We hold quarterly Credit Risk review Committees to review our credit model, procedures and lending criteria.
• We already reject more loans than we accept
Ultimately it is in our interests to minimise defaults, lenders will not lend if the default rate gets too high and without lenders we don’t have a platform. Many of our staff and directors have personal funds in each and every loan and hence it hits all our personal pockets too. Trust us we want to improve each and every day.
We have to balance staying true to the ethos of rebuildingsociety by working with borrowers where the circumstances warrant it. e.g. Ad****k where the Director has worked openly with us on a repayment plan and “L* D****” with a husband and wife Director team and the wife has just been diagnosed with a Terminal illness and L** J*L*, where the director encountered difficulties with their distributor, who failed. These are the sort of situations where we can help as a community. However, in cases where the Directors of the SME are intentionally withholding your funds and misleading you and ourselves, we have no hesitation in hitting hard and hitting fast
Although this response has been generated by the questions above, I'll also post this as it's own new thread.
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sqh
Member of DD Central
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 Mar 12, 2016 16:21:14 GMT
rebsrep
"We have to balance staying true to the ethos of rebuildingsociety by working with borrowers where the circumstances warrant it."If you work with borrowers, how did you allow L** J*L* to default after one payment ? It was a ReBs requirement that the borrower took out PG Insurance. My understanding is that the PG Insurance is worthless unless 3 payments are made. There are other loans, including a current loan in auction, which also have PG Insurance. What are you doing to ensure that these borrowers make at least 3 payments ?
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kaya
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Post by kaya on Mar 12, 2016 16:28:29 GMT
I like the sound of all that Rebs, but as been pointed out, it may be too late to catch up with the nags that have bolted with the lenders cash!
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ablender
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Post by ablender on Mar 12, 2016 22:47:07 GMT
rebsrep
"We have to balance staying true to the ethos of rebuildingsociety by working with borrowers where the circumstances warrant it."If you work with borrowers, how did you allow L** J*L* to default after one payment ? It was a ReBs requirement that the borrower took out PG Insurance. My understanding is that the PG Insurance is worthless unless 3 payments are made. There are other loans, including a current loan in auction, which also have PG Insurance. What are you doing to ensure that these borrowers make at least 3 payments ? : If three payments are a requirement for a PG Insurance (as indicated above), why don't you hold a minimum of three months worth of interest up front?
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Post by bluechip on Mar 14, 2016 18:26:42 GMT
I'm pleased REBS have realised there is a major problem and are trying to remedy it. Personally I have been stung sufficiently to have pulled 95% of my money out, hopefully if these measures have the intended effect I will tentatively return. My initial good will has been eroded by the companies making 1 payment only, which is a travesty for both us investors and REBS. In my view they are holding back what is/was a very good idea and are beyond contempt.
The very fact REBS are trying to do something gives me renewed confidence, but the proof will be in the eating now, and I wont be hungry for some time.
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johnfleet
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Post by johnfleet on Mar 14, 2016 18:47:48 GMT
too late for me I'm afraid. I'm already looking a defaults which amount to 2/3 of interest earned. So I'm getting out and can't imagine coming back - not when there are at least 3 platform consistently delivering 12 per cent each and every month...
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ablender
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Post by ablender on Mar 14, 2016 19:03:46 GMT
too late for me I'm afraid. I'm already looking a defaults which amount to 2/3 of interest earned. So I'm getting out and can't imagine coming back - not when there are at least 3 platform consistently delivering 12 per cent each and every month... You are potentially more lucky then myself. I can loose 1/3 of the money I invested in ReBS. Not a huge sum in itself but still more than I wished for. And when I think that some of that money can be recovered if and only if ReBS presses hard, I have to think, will they (ReBS) actually do it.
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Mar 14, 2016 21:55:42 GMT
too late for me I'm afraid. I'm already looking a defaults which amount to 2/3 of interest earned. So I'm getting out and can't imagine coming back - not when there are at least 3 platform consistently delivering 12 per cent each and every month... Don't forget to factor in any tax you may have paid on interest earned in previous years. When I did the sums I was horrified as losses wiped out all my gains. Currently I have 7 defaulted loans and a further 7 which are heading in the same direction. I have been downsizing now for a while and I no longer have any other loans with REBS. I guess I may recover some cash but judging on REBS past performance I am not holding my breath. Whilst on the subject of holding ones breath. There must be a better than even chance that you will get some defaults with other platforms. So further question must be just how good will they be at recovery? Final thought. Why are punters still buying into new REBS loans? Guess they don't read this Forum.
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Post by jackpease on Mar 15, 2016 9:00:18 GMT
>>>So I'm getting out and can't imagine coming back - not when there are at least 3 platform consistently delivering 12 per cent each and every month... Rebs, FK, FC, Assetz have all been tested because they have mature and new loans that have gone bad and many of us have suffered and reacted accordingly. People keep alluding to the 12%ers but i don't think they have been tested in the same way as Rebs etc - some of these loans are very very big compared to the size of the platform. I've given up imagining that i can spot winners and losers having been caught out by liars - but if anyone really does believe they can accurately judge a firms' prospects i suspect there are some real bargains to be had on Rebs etc. If I owned a P2P platform and someone lied to me I would take out a private prosecution for fraud and not mess about. Don't these guys get angry too? Jack P
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johnfleet
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Post by johnfleet on Mar 15, 2016 13:21:42 GMT
>>>So I'm getting out and can't imagine coming back - not when there are at least 3 platform consistently delivering 12 per cent each and every month... Rebs, FK, FC, Assetz have all been tested because they have mature and new loans that have gone bad and many of us have suffered and reacted accordingly. People keep alluding to the 12%ers but i don't think they have been tested in the same way as Rebs etc - some of these loans are very very big compared to the size of the platform. I've given up imagining that i can spot winners and losers having been caught out by liars - but if anyone really does believe they can accurately judge a firms' prospects i suspect there are some real bargains to be had on Rebs etc. If I owned a P2P platform and someone lied to me I would take out a private prosecution for fraud and not mess about. Don't these guys get angry too? Jack P Everyone's mileage will differ. I've been with MT since 5/15, Ablrate since 11/14 and SS since 4/14. So far (touching every bit of wood in sight!) they've all delivered exactly what they have promised and have lost me - precisely - nowt! That will do for me.
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shimself
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Post by shimself on Mar 15, 2016 14:58:26 GMT
.... If I owned a P2P platform and someone lied to me I would take out a private prosecution for fraud and not mess about. Don't these guys get angry too? Jack P They aren't privately owned so you would have to justify it as giving value to shareholders. I think you could argue that a reputation for not suffering villainy could contribute to profitability but it's debatable.
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nick
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Post by nick on Mar 26, 2016 11:46:06 GMT
.... If I owned a P2P platform and someone lied to me I would take out a private prosecution for fraud and not mess about. Don't these guys get angry too? Jack P They aren't privately owned so you would have to justify it as giving value to shareholders. I think you could argue that a reputation for not suffering villainy could contribute to profitability but it's debatable. I have invested in all the major P2P platforms for several years now. REBS has consistently given me the highest net return every year for the past 3 years, averaging 17%+ pa after defaults. The increase in defaults recently is of concern, but is still not particularly significant (statistically) and is over a period that is traditionally higher risk for SME business (ie the Christmas period where cash flows are often strained). I can understand that some new investors that only started investing recently could have easily been burn't because of a combination of the up tick in defaults and credit concentration from investing in only a small handful of loans. There is no doubt that the majority of loans on REBS are more riskier than on other platforms, and in most cases are unsecured. Ignore references to personal guarantees and PGI, this not meaningful security and the loans by any normal measure are unsecured. However, the higher risk is rewarded by higher gross interest rates of typically 18-20% for unsecured loans. Provided you manage credit concentration well, the risk adjusted return is in my experience still superior to any other platform in the UK. I concluded a long time ago that trying to select individual loans to invest in over others was more detrimental than maximising the diversity of my loan book. I have now invested across more than 60 loans and try to limit my exposure to an single loan to less than 5%. I'm a big fan of SS, MT, and FS and invest across all these platforms as all provide loans with reasonable levels of security and are relatively simple and easily to deploy money on for a healthy 12%. However, my REBS loan book provides the potential for higher net returns (and has delivered on these), at the expense of requiring more time to manage and the emotions involved in experiencing defaults.....
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baldpate
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Post by baldpate on Mar 26, 2016 22:08:16 GMT
I agree with much of what you say, Nick, and I congratulate you on acheiving a return of 17%+ after defaults on your portfolio.
My own portfolio (55 live loans, no one more than 4% of total in any one), although built over only 15 months, superficially has a similar profile to yours . However, I think your credit assessment skills must have been rather better than mine, for I am now showing a net return of only 14% (down from 17% previously) after recently suffering my first default - this despite avoiding several other defaults by some timely footwork on the secondary market. Realistically, several more of my loans are destined for imminent default, which I expect will bring my net return to under 10%.
I hold to the hope that this is a relatively short term issue and that - by persisting with a strategy of diversification, and of running the 'winners' and cutting back where possible on the poor performers - I shall eventually get a decent return. But ReBS certainly requires much more effort (in time and emotion) than the other platforms you mention. One thing is certain : investing in ReBS is something of a white-knuckle ride, and is not a place for the nervous or risk-averse investor.
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