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Post by GSV3MIaC on May 28, 2016 19:09:28 GMT
I think that's a bit conservative (small c) .. the PF is a significant marketing tool (for SS) so they'd be unhappy to have it be perceived to have failed. Whether failure of the PF could take the platform down (like failure of the RS one almost certainly would) I don't know, but it would certainly put a big dent in it. If a couple of £6m loans went belly-up in short order the PF might well struggle, or even die, so it certainly isn't 'belt and braces' like FSCS backed by HMG, but I think it is worth a bit more than nowt.
If nothing else, the first time the PF visibly fails to deliver, it'll be early warning to head for the high ground (assuming you can, amid the stampede of others).
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on May 28, 2016 19:10:12 GMT
I had to put quite a bit of thought into it
I eventually voted "14% return on loans vs no provision fund" because I like to think my own DD, and diversity would minimise the risk in being involved in a defaulted loan. I'm not saying that I wouldn't get caught up in a default, just that the extra 2% should mean I would be receiving +12% interest.
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Post by westcountry on May 28, 2016 21:42:22 GMT
I voted for 14% and no provision fund.
I tend to ignore the SS provision fund when evaluating investments, as it is discresionary, so there is no guarantee that it would pay out if a loan failed & the security didn't raise enough money to repay lenders in full.
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Post by earthbound on May 28, 2016 22:16:50 GMT
I think that's a bit conservative (small c) .. the PF is a significant marketing tool (for SS) so they'd be unhappy to have it be perceived to have failed. Whether failure of the PF could take the platform down (like failure of the RS one almost certainly would) I don't know, but it would certainly put a big dent in it. If a couple of £6m loans went belly-up in short order the PF might well struggle, or even die, so it certainly isn't 'belt and braces' like FSCS backed by HMG, but I think it is worth a bit more than nowt. If nothing else, the first time the PF visibly fails to deliver, it'll be early warning to head for the high ground (assuming you can, amid the stampede of others). i agree, failure of the PF in my opinion, will have a far more negative impact than 1 or 2 loan defaults, i would be happy to take 11% , or even 10% if SS could boost the PF significantly.
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tx
Member of DD Central
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Post by tx on May 28, 2016 22:27:14 GMT
I voted for 14% and no provision fund. I tend to ignore the SS provision fund when evaluating investments, as it is discresionary, so there is no guarantee that it would pay out if a loan failed & the security didn't raise enough money to repay lenders in full. Totally agree, if Lendy protect themselves by not promising you they will cover any losses, then why bother, the whole provison fund becomes a gimmick and market tool, and therefore cannot be included in any risk assessment! Why? Because you cannot quantify it! Not even the probability that they will use the fund to cover! There is no track record, no promise, no contractual obligation, that is nothing; how can anyone rely on words in the provisional fund's description to decide on how risky an investment is? Only hoping the loss will be covered.
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t
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Post by t on May 29, 2016 1:02:11 GMT
I maned edge my own risk took 50 k out sleep better now after referendum take another look
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Post by alexb26 on May 29, 2016 1:38:55 GMT
I feel like if SS scrapped the PF and offered 14% we would see less liquidity on the SM (in my opinion the lender base less keen to buy up old loans). Important for me to be able to shift loans < 100 days so happy with the status quo.
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tx
Member of DD Central
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Post by tx on May 29, 2016 1:49:46 GMT
I feel like if SS scrapped the PF and offered 14% we would see less liquidity on the SM (in my opinion the lender base less keen to buy up old loans). Important for me to be able to shift loans < 100 days so happy with the status quo. I actually concur even though i have voted 14%. you changed my mind, although I still believe the provision is actual gimmick.
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SteveT
Member of DD Central
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Post by SteveT on May 29, 2016 6:22:57 GMT
I don't think the question is realistic. The poll options imply that there is enough margin in every SS loan to "pay out" 14% to lenders via one mechanism or another. In reality, the 2% of each loan that is placed in the provision fund is only ever incurred as a sunk "cost" to the business if / when a loan defaults and the security doesn't cover the capital (maybe also some / all of the interest). To date, this has yet to happen; each time a loan repays in full the 2% that was put aside in the PF comes back to the P&L. I presume SS could not increase the lender rate to 14% without increasing the borrower rate by a similar amount, which would make them much less competitive for new business and/or force the acceptance of riskier loans.
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jonah
Member of DD Central
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Post by jonah on May 29, 2016 7:11:47 GMT
I don't think the question is realistic. The poll options imply that there is enough margin in every SS loan to "pay out" 14% to lenders via one mechanism or another. In reality, the 2% of each loan that is placed in the provision fund is only ever incurred as a sunk "cost" to the business if / when a loan defaults and the security doesn't cover the capital (maybe also some / all of the interest). To date, this has yet to happen; each time a loan repays in full the 2% that was put aside in the PF comes back to the P&L. I presume SS could not increase the lender rate to 14% without increasing the borrower rate by a similar amount, which would make them much less competitive for new business and/or force the acceptance of riskier loans. This is true.... Effectively saving stream have deferred 2% of their payment and put it at some risk if the loan doesn't close as hoped. Also, there is a massive difference between a one off 2% and an extra 2% per annum interest. The latter could be a lot more than the former for loans running over the nominal 1 year period (the reverse is also true).
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Post by harvey on May 29, 2016 9:42:26 GMT
The first thing that attracted me into peer to peer lending was the provision fund that Wellesley and company had set up. without the reassurance of that fund I don't think I would have got involved in the sector in the first place.
when SS launched its provision Fund that gave me comfort and encouraged me to invest more on here. Yes it won't be big enough to bailout a massive failure but with a small to average loss where the loan security has failed to cover the full loss you can dig into that Fund and make up the shortfall so people don't lose their money or so much.
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Post by GSV3MIaC on May 29, 2016 9:46:53 GMT
I don't think the question is realistic. The poll options imply that there is enough margin in every SS loan to "pay out" 14% to lenders via one mechanism or another. In reality, the 2% of each loan that is placed in the provision fund is only ever incurred as a sunk "cost" to the business if / when a loan defaults and the security doesn't cover the capital (maybe also some / all of the interest). To date, this has yet to happen; each time a loan repays in full the 2% that was put aside in the PF comes back to the P&L. I presume SS could not increase the lender rate to 14% without increasing the borrower rate by a similar amount, which would make them much less competitive for new business and/or force the acceptance of riskier loans. That's a good point, although it does imply the inverse .. i.e. we could accept a mere 11% and perhaps have a 6% PF. People would like for 2% of every loan to be put into an (ever increasing, hopefully) PF, but that's not the way it currently works.
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