More defaults - The hardcore facts

HI Magenta

With a view to workable solutions.

It is apparent that the first 12 months present the greatest risk to lenders in witnessing their lent funds default, I have nicknamed the 6-12 month period the 'death zone'.

A few Options:

a] Rebuilding Society themselves lend £500-£1000 in low denomination bids for an agreed 12 months before selling them off on the 2nd market at par or for profit. [Rejected, FCA compliance reasons].  This would not stop defaults, it would only reduce lending rates, make the auction more competitive and give confidence in the auction as ReBS is 'investing' in a company. Imagine if all the companies they invested in defaulted, the platform would run out of working capital !

b] 'Ambassador' bidding where one of the lending community is nominated 'Ambassador' for a 6 month period bidding from a ring fenced Rebuilding Society funding pot, nominated lender changed at 6 months by vote. Ambassadors have full autonomy over lending decisions and, again loan parts would be sold down at 12 months with funds recycled. [danraj in reply to my proposal early 2016: "Has merit let me think about it."] as yet no reply received...

This would not stop defaults only give confidence in the lending community - Which has nothing to do on how the borrowing company is being run.

Combination of b] and:

c] An agreed % of Rebuilding Society and Broker fee payments distributed in equal installments 1 through 12 months, with payments being made each month Only if loan repayments are met, the hope being that it will further focus attention on the application quality reaching lending. - This is something I like. 

When LTT published their loan application due to the on going mis communication between them and ReBS it stated a 5.9% admin fee (I think) !! Some of this should be put into a provision fund, as well as the introducers fee.
The Intro fee would be paid out as the loan reduces.
What happens to the late paying 'fine' ReBS say they slap on borrowers, that should be given back to investors as we are the ones losing out !

If b] is not deemed acceptable following consultation with the FCA then c] would perhaps be a good option I reckon as the financial risks to everyone participating via Rebuilding Society would be pretty much the same.

Anyone got ideas on how best to create an 'incentive' for Rebuilding Society and our visiting Brokers to give greater attention toward "further improving" the quality of our lending requests?
Lots of ideas, all falling on deaf ears, and the lending community is the bottom of the pile 
I am so disappointed - After the investors update presentation showing us how much money the platform has made, the lack of communication to investors and amount of money in outstanding default, ReBS still refuse to engage and respect their investors.
If they addressed some of the below, they may not get such bad press from us
Introducers still get the fees regardless of the loan status
ReBS haven't completed a historical due dil of who is paying by SO/DD, and if nothing is set up why are they not enforcing one is set up .
Not amending repayment schedule when accrued interest is due and actively collecting it
Letting security on loans be used against other loans.

It happens in every single part of the retail investment industry, shares, bonds, funds .....    p2p has a chance to do better by its customers (meaning lenders)

I forgot to add, borrowers are charged apparently for a late payment or not sticking to the repayment schedule. - Who gets these fee's and how are they collected?

Surely if we the lenders are out of pocket, we should get these penalties fee's , or are they just there to cover the cost of the admin to collect them?

rebsrep: do you fully disclose your recovery costs in an Event, where you are able to cover your costs and deduct These from the payments?

@magenta 
If you are following various threads on recent late payers, you will see that our recovery agents are pursuing a number of borrowers that have paid the repayment and but failed to repay any accrued interest. We do chase the interest owed to lenders. What our previous post failed to perhaps put across clearly, is that where interest is due we continue to chase it until paid or an alternative plan is arranged. Where late fee’s are due to Rebs, we will make a decision on whether to pursue the fees at the present time or rather to add them to the account to be redeemed at a later date. Continuing to harass an already distressed borrower for fees owed to Rebs or to pursue legal action against them, is likely to have an extremely negative impact on the borrower’s ability and propensity to repay and honour their repayment to investors. Rebs seeks not only to ensure lenders get repaid in a timely fashion but also to build stronger relationships with borrowers on your behalf so as to improve association between all parties where the situation becomes removed from the expected repayment schedule.



I trust that this position is now clear and that you have, as recently expressed in your other comments Magenta, noticed that Rebs have not taken a ‘Saft’ approach to delinquent borrowers in their recent pursuits of investor’s funds.



buttchopf23 where a default event occurs, Rebs will first seek to attempt to add its fee’s to the amount to be repaid by the borrower. Where this is not possible for whatever reason, and Rebs is able to recover a full defaulted sum, our full fee’s etc will be disclosed to lenders ahead of settlement of the loan. Given the often complex and protracted nature of debt collection, Rebs cannot precisely predict the costs it will incur on behalf of the lenders during an attempt to recover funds, but this is estimated to be anywhere between 5-15%.

In most cases the borrowers haven't paid because they are skint.  Not to wind us lenders up.

We (ReBS on our behalf) have to make a judgement as to which course of action is most likely to get the account back into order, and I don't believe that going nuclear in every case as soon as trouble arises is helpful. 

Another way of saying "consistency of approach" is "robotic".   When a loan gets into trouble you know ReeBS offer to pursue it on each of our behalves unless the lender wishes to opt out and pursue it on their own - so go on, pick on and give it a go, let us know how you get on.