merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Nov 13, 2013 15:33:42 GMT
Pretty much the whole reason this Forum is in existence is because of the (to put it politely) strange behaviour of FC in not replying to questions coupled with over fierce moderation of the official FC forum. Many of us who are active on here are also investors in FC. Some of us have large amount tied up with FC, so you can imagine our frustration! The quality of the communication skills of the FC team almost defy description. They are very good at trotting out platitudes but cr*p at telling us what we need to know so that we can make fairly basic financial decisions. Their communications model seems to be to treat investors as small children. it is for that reason so many of us are moving elsewhere.
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oldgrumpy
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Post by oldgrumpy on Nov 13, 2013 18:19:03 GMT
Nov 13, 2013 15:13:38 GMT bugs4me said: "I'm surprised that a member of the FC team has not jumped in to clarify many of the issues being raised here..."I think we might see Becky's reply soon................... Hi Becky  edit 15 Nov 11:07 .... maybe not ... she's just lurking 
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Nov 13, 2013 20:39:42 GMT
Hi oldgrumpy. What you like on conspiracy theories?
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maxmarengo
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Post by maxmarengo on Nov 14, 2013 11:28:36 GMT
Back to the original topic. Here is the trend in late loans:  So lates are actually a little better than this time last year! Attachments:
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Post by chielamangus on Nov 14, 2013 13:21:04 GMT
I think the only conclusion I can take from this graph is that larger loans are more likely to be late. Even this may be challengeable because the vertical axis is percentage, and percentages hide all manner of information. If the info were provided for <30 days late, 30-59, 60-89 and 90 plus separately with the original numbers rather than percentages then the subject would be illuminated more. But this requires more work. I think FC should be providing this type of information to show trends .....
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Nov 14, 2013 14:42:51 GMT
I think the only conclusion I can take from this graph is that larger loans are more likely to be late. Even this may be challengeable because the vertical axis is percentage, and percentages hide all manner of information. If the info were provided for <30 days late, 30-59, 60-89 and 90 plus separately with the original numbers rather than percentages then the subject would be illuminated more. But this requires more work. I think FC should be providing this type of information to show trends ..... Could not agree more. Once you start to play with percentages in this way you can almost make it read anyway you want. With FC the matter is further confused by the time function of each loan and the spectacular growth in the number and value of loans. I am in the process of writing to the FCA about how defaults are dealt with and progressed by FC in particular and other P2P facilitators as well. I would encourage anyone who has any gripe about how P2P's manage our money and their businesses to write to the FSA who is very interested to hear about individuals experiences. See Pikestaff's post under Regulation above.
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maxmarengo
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Post by maxmarengo on Nov 14, 2013 18:36:24 GMT
Hang on, all I was trying to do was provide a simple bit of information to answer the question "has there been an increase in the number/value of late loans". And the answer seems to be no.
Of course it could be that the current batch of late loans are later than before. I do not have any information on that. Or it could be that the growth in the portfolio is diluting the percentage of lates (if you assume that old loans are more likely to be late). That I could look at. However, given that the raw data does not suggest that this will show anything interesting I will probably not do it.
I have to disagree with your conclusion that big loans are more likely to be late. The percentage of principal that is late is lower than the percentage of loans that are late, which suggests to me that big loans are less likely to be late. That is what I would expect - bigger companies are less likely to miss a payment in error.
Max
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Post by chielamangus on Nov 14, 2013 18:56:13 GMT
Maxmarengo - Sorry - I was not belittling your effort in any way - just pointing out the weakness of aggregated data. And you are RIGHT about the defaults being greater on the smaller loans. I just glanced at your key and assumed the graph lines were in the same order as your key - which they are not. But I repeat my point that I think this is a job that FC should be doing as they have the original data.
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maxmarengo
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Post by maxmarengo on Nov 16, 2013 7:38:57 GMT
Ok, so as an easy way to look at whether late percentage gets worse as loans get older, I repeated the analysis with just LoanIds < 2000. These loans will have been listed for over a year now. For these loans, the percentage of lates is rising - see chart. So it is possible that the rapid growth of FC may be obscuring the performance of late loans.  |
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pikestaff
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Post by pikestaff on Nov 16, 2013 9:02:38 GMT
I think the only conclusion I can take from this graph is that larger loans are more likely to be late. Even this may be challengeable because the vertical axis is percentage, and percentages hide all manner of information. If the info were provided for <30 days late, 30-59, 60-89 and 90 plus separately with the original numbers rather than percentages then the subject would be illuminated more. But this requires more work. I think FC should be providing this type of information to show trends ..... Could not agree more. Once you start to play with percentages in this way you can almost make it read anyway you want. With FC the matter is further confused by the time function of each loan and the spectacular growth in the number and value of loans. I am in the process of writing to the FCA about how defaults are dealt with and progressed by FC in particular and other P2P facilitators as well. I would encourage anyone who has any gripe about how P2P's manage our money and their businesses to write to the FSA who is very interested to hear about individuals experiences. See Pikestaff's post under Regulation above. Gulp. The last thing I would want is for the FCA to be inundated with complaints about how defaults are progressed. The consequences of this are unpredictable and not necessarily desirable. Personally, I expect defaults to take a long time to be worked out, and I'm happy if I am updated once a month (less often if I've been told not to expect anything for a while). I agree there is scope for platforms to manage our expectations better, but I do not share the impatience of some on the forums. On statistics, I agree FC could do better. In particular I'd like to see something on the term structure of defaults, even if part of it's just their internal assumptions. But my working assumption is that their annualised default estimates will turn out to be roughly right, which implies a significant rise in defaults over time (and is what we should expect anyway). If anyone has monthly downloads of the loan book from the inception of FC, or even just covering a reasonably long period, it should be possible to derive something on term structure.
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maxmarengo
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Post by maxmarengo on Nov 17, 2013 7:35:31 GMT
Pikestaff, what exactly do you mean by the "term structure" of defaults? If you can give a simple definition, I will see if I have data to calculate it.
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Nov 17, 2013 16:22:03 GMT
Pikestaff, coming back to the issue of defaults and the FSA, perhaps I should have made myself a bit more clear. What I would like the FSA to do is to look into the issue of defaults and P2P lending. As things stand there is no incentive for P2P bodies to chase defaulters what-so-ever. They do not lose cash or incur costs if they chose not to pursue defaulters and in fact the only thing they have to worry about is loosing face in the market. Now I think if the FSA are going to regulate this is an area that should be subject to regulation. What and how, I have ideas which I have conveyed to the FSA. However I would like to hear what others on here think they should do and perhaps some may also wish to write to the FSA with their suggestions. The more that write the greater chance that the FSA might do something but just whinging is not likely to get very much.
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Post by bracknellboy on Nov 17, 2013 17:16:07 GMT
Pikestaff, coming back to the issue of defaults and the FSA, perhaps I should have made myself a bit more clear. What I would like the FSA to do is to look into the issue of defaults and P2P lending. As things stand there is no incentive for P2P bodies to chase defaulters what-so-ever. They do not lose cash or incur costs if they chose not to pursue defaulters and in fact the only thing they have to worry about is loosing face in the market. Now I think if the FSA are going to regulate this is an area that should be subject to regulation. What and how, I have ideas which I have conveyed to the FSA. However I would like to hear what others on here think they should do and perhaps some may also wish to write to the FSA with their suggestions. The more that write the greater chance that the FSA might do something but just whinging is not likely to get very much. While I understand the concern, I am most definitely not a fan of intrusive regulation/over-regulation. Not least of which because of the cost burden of compliance and proving compliance with regulation, AND the additional inherent anti competitive advantage this will give to larger incumbents (which is probably why FC was a chief protagonist in requesting FSA regulation for the sector). The example here is for me a perfect one of where the burden of regulation should not be involved. In the end a platform will live and die (in the lenders eyes) by its risk/return balance. Therefore they already have a significant incentive to chase defaults to the degree which it makes reasonable financial sense to do so (across the breadth of loans, not in relation to any single loan except by virtue that it will reflect in their total recoveries and therefore lender returns). I would hate to think what the 'shape' of regulation in this area would look like, what constraints/lack of flexibility it might place on a recovery process, and the cost to ensure auditable compliance. Sorry merlin, can't agree with you on this one. I come at it from a different angle: Namely that the platforms most definitely do have a financial interest, albeit is a mid term play rather than a short term play tied to actions on any single specific default. P.S. Still, I think a clever move on the part of any platform would be to commit its own capital to x % of every loan, even if that x % is v. small.
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pikestaff
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Post by pikestaff on Nov 17, 2013 21:15:09 GMT
Pikestaff, what exactly do you mean by the "term structure" of defaults? If you can give a simple definition, I will see if I have data to calculate it. Term structure of defaults = how the probability of default in any given month varies with the length of time since the loan was made. The default rate on FC currently is significantly below their suggested annual default rate. I think the main reason for this is that the monthly probability of default reaches a peak (or is expected to do so) about 2-3 years into a loan. This is because it is how long a business plan (for which the loan was taken out) takes to conclusively succeed or fail. PS agree with bracknellboy's post above. I'm a crawleyboy myself (or was), so takes a lot to say that
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merlin
Minor shareholder in Assetz and many other companies.
Posts: 902
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Post by merlin on Nov 17, 2013 22:55:08 GMT
Bracknellboy and Pikestaff thanks to responding to my suggestion. I respect your position on this and hope that others will chime in with a few of their ideas.
From an expat Croydon boy.
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