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Post by jackpease on Apr 11, 2016 12:43:25 GMT
I've flagged this up on the general board as I think it's really important and won't have been spotted on the Rebs thread.. Kevin flagged up on the Rebs board www.p2pindependentforum.com/thread/5045/ a loan that disappeared - and Rebs confirmed that the borrower had pulled out as they had got fed up with lenders phoning them up doing their own due diligence. This has far wider implications for us all than just Rebs - I find it quite worrying as I think most borrowers would assume the Q&A board was supposed to cover this. Jack P |
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ben
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Post by ben on Apr 11, 2016 13:03:55 GMT
Shame for them but can understand why would not want to proceed.
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Post by mrclondon on Apr 11, 2016 16:18:20 GMT
Not too dis-similar to a recent case on an AC (distressed) loan where at least one lender discussed the security with the local authority planning department.
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Post by Butch Cassidy on Apr 11, 2016 16:53:05 GMT
I suspect that when lenders don't trust the platform to do enough DD, extract enough information or draw up watertight contracts they feel empowered to take unilateral direct DD themselves; not sure it's advisable as all approaches should be made via the platform Q&A or similar IMO. I certainly trust some platforms above others but for those with only minimal or poor records of DD I only choose to buy via SM into loans with proven payment histories instead.
The platforms that lose or default investors money regularly, at the very early stages of loans, will always be accused of insufficient DD but if the borrower/business wilfully misleads the platform/introducer to gain the loan I have some sympathy - I was stung on Rebs with the watch retailer who ceased trading before the 1st payment was even due  but am not sure any other platform would have acted differently, as all the published information looked OK.
Platforms will ultimately succeed or fail on the % of defaults net of their recovery - investors need to accept some defaults will always happen but the important thing is that they are kept to a manageable level & net returns are still positive over the medium term. If platforms can't convince investors of this they will find them voting with their feet.
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Post by Deleted on Apr 12, 2016 13:18:19 GMT
Surely it's simply; if you don't trust the platform to do the due diligence properly, then don't lend any money through them?! I have no sympathy for lenders who openly state they don't trust the level of vetting done on the borrowers, but lend money with the platform anyway. There is very little real DD you can do on a private company if you're not the platform/bank unless they give you the information themselves (MI, debtor / creditor information, tax returns), so if you're relying on searching companies house for abbreviated accounts and checking their website, you've only got yourself to blame.
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pikestaff
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Post by pikestaff on Apr 13, 2016 15:04:30 GMT
It is sometimes possible to find things that have been missed or glossed over, but the right place to raise them is in the Q&A so that all lenders are aware of the issue and any response. Lenders should not be ringing up borrowers unless they have been invited to do so.
For many borrowers, the biggest competitive disadvantage of p2p finance versus other sources is having to share private information with the crowd. The better we behave, the fewer borrowers will be put off. If a borrower has a bad experience and tells all his mates, that's several potential borrowers lost.
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james
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Post by james on Apr 13, 2016 15:38:17 GMT
I suppose this may have been triggered or indirectly encouraged by the recent issues that this platform had with some loans. Also not helped I suspect by platforms doing loans when the security turned out to be rather less secure than had been initially suggested.
Electronic record checking is something that seems always fine, since it's just bulk data from public sources.
When it gets to asking for information from the borrower that's where Q&A features should really be used first, or where contact with a platform with questions instead should really be used first.
Those who are investing a significant portion of their assets - meaning well above a percent or two - might want to do more than that. If it's just walking into a business as a customer or taking a look at the place that also seems harmless because it consumes no time or resources of the borrower. Such visits might usefully be synchronised and reported on the boards here.
When it comes to contacting the borrower as individuals that's more likely to be troublesome. I've been invited to meet with at least one borrower by a platform so platforms aren't necessarily hostile to this, provided it is done in a suitable way, which will vary depending on the circumstances. First try? Ask the platform to coordinate and get prior agreement from the borrower to take x calls and use the board here to ask to be one of the callers with a poll used to select the ones who get to do it, based on the opinions of other investors about who they would want to trust in asking questions and relaying results.
Least desirable is potentially a thousand investors all making calls that would involve senior management. I doubt that many borrowers would tolerate this sort of level of contact. A couple or three, agreed in advance? Much different and easier to agree to.
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Post by ablrateandy on Apr 13, 2016 16:00:01 GMT
It is common practice for bond issues for borrowers to make themselves available to give a telephone presentation and take questions. It is certainly something that we have looked at in a couple of cases and doubtless it will happen at some point in the next couple of months.
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bigfoot12
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Post by bigfoot12 on Apr 14, 2016 13:08:02 GMT
I am very worried by the behaviour highlighted by this thread. I am concerned that platforms will be encouraged (or forced) to have anonymous borrowers. I am much happier lending on platforms such as FC and AC which show me the borrower. I like this for three reasons:
I think the platform is less likely to be a Ponzi scheme if the borrowers are public. (Of course I don't think either of these are.)
I like being able to see customers of one platform borrow from another and similarly for brokers. (Again more confidence that things are as they should be.)
I am less likely to lend more than I intend to related borrowers if I know who the borrowers are. (I am very nervous about this on SS and other platforms.)
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Post by Deleted on Apr 15, 2016 18:10:24 GMT
Some platforms (I would say FC for example) should be ashamed for the low level of due diligence done on borrowers and for the high level of very early defaults, specially in selected classes (say laywers) targeting specifically the weak platform.
I stopped doing any SME loans for the high level of 'fraud' (or piloted /prepackaged defaults with casual saving of all the borrower possessions in a way or another...). But I can see very well why lenders would want to do their checks before lending. Some platforms are not to be trusted at all.
And to be honest I also did contact some misbehaving borrowers in the past when it was clear they had the means but did not want to repay lenders (I distinctly remember an architect which preferred to go and watch Chelsea matches with his sons rather than paying back what was due...). And be sure that a lender's "hug" will be stronger than a bland Platform reminder.
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but am not sure any other platform would have acted differently, as all the published information looked OK. 
