oldgrumpy
Member of DD Central
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Post by oldgrumpy on Apr 3, 2014 15:52:33 GMT
It is purely because of government and bank "punishment" of people who have saved for years (on government advice) that I have even entered the P2P/P2B world, despite the greater risk.
Since I started with FC in the autumn of 2012, they have been quoting the same figures for "estimated annual bad debt rate".
A+ 0.6%
A 1.5%
B 2.3%
C 3.3%
and since 2013, C- 5.5% (from where did this figure actually come?)
Does anyone who was in FC from the start know if they have ever changed these estimates following actual performance on their platform?
If they haven't, surely it is time to update these estimates, giving evidence for any changes required. Alternatively, confirmation of these estimates could be given, with the actual figures of the platform's experience.
I wonder if the regulators will insist on more visible information than is currently provided.
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Post by bracknellboy on Apr 3, 2014 16:12:57 GMT
It is purely because of government and bank "punishment" of people who have saved for years (on government advice) that I have even entered the P2P/P2B world, despite the greater risk. Since I started with FC in the autumn of 2012, they have been quoting the same figures for "estimated annual bad debt rate". A+ 0.6% A 1.5% B 2.3% C 3.3% and since 2013, C- 5.5% (from where did this figure actually come?) Does anyone who was in FC from the start know if they have ever changed these estimates following actual performance on their platform? If they haven't, surely it is time to update these estimates, giving evidence for any changes required. Alternatively, confirmation of these estimates could be given, with the actual figures of the platform's experience. I wonder if the regulators will insist on more visible information than is currently provided. They do give figures for 'actual' and corresponding estimated liftetime (stats page). But what of course they haven't done, as far as I can tell, is converted those numbers into 'estimated annual' based on 'performance to date'.
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merlin
Minor shareholder in Assetz and many other companies.
Posts: 902
Likes: 302
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Post by merlin on Apr 3, 2014 16:16:46 GMT
Don't think you will get far with this but I hope you will succeed where I failed. About 9 months ago I asked FC the same question and got a rather vague answer which stated the until all loans in a particular period had run their course it would not be appropriate to provide information about failures. Now the problem was then that a great many loans had not run their course as some had been taken out to run for 5 years. Even know some of these are still running.
However when the FCA were seeking input to their proposed intervention in the P2P market I suggested at some length why the numbers posted and you quoted had to be misleading to Joe public. I also suggested that real numbers should be posted and revised regularly, say every quarter. I haven't seen any mention on this subject recently but a formal request to FC and if they don't reply a complaint to the FCA might just do the trick and particularly so if you have some evidence to suggest FC's figures are wrong.
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Post by GSV3MIaC on Apr 3, 2014 16:39:41 GMT
Ooops, terrible echo on that last post Merlin.
FC makes the data available to (mostly) work out the actual default rates, but there are several different ways of slicing the stats. The one I prefer it to look at actual losses (accepting there may be some more repayments later) vs 'pound years' of loan (for extra points, correct for the fact that most loans don't fail very early). The answers from that don't (yet) show that FC is being unduly optimistic, or pessimistic, but there isn't a lot of data (more than half the loans haven't run a year yet .. maybe not even 6 months .. no 5 year loan has run the full course.). Best to download the loan book, and roll your own stats, depending on what you want to count and how (AFAIAC a late loan is probably halfway to being a default, but YMMV).
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Post by businessbuddy on Apr 3, 2014 18:13:24 GMT
 The rates FC are displaying on the Statistics page are increasing at a concerning level. 'C-' bad debt has kicked in so I would expect the average rate to increase markedly.
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Post by GSV3MIaC on Apr 3, 2014 18:31:48 GMT
But the question remains, what is the divisor .. all loans? loans that have run their course? What's the allowance for duration, or when the loan goes bad?? If you want %/PA then you need to be dividing pounds lost by something which has pounds AND years in it. And I definitely want %/PA .. not interested if 2% of FC loans have gone bad ... is that 2% in a month, 2% in a year, or 2% since FC started 3+ years ago. And even then did they go bad in month1 or had they paid (silly example, but for instance) 100% PA interest for 2 years and THEN went bad (which'd still make them quite tasty).
It just isn't simple .. sorry and all, but that's finance for you..
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