mikes1531
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Post by mikes1531 on Sept 28, 2016 20:48:16 GMT
With most loans now being fully funded then I agree it is time for INPL to finish as again it doesn't add anything in my opinion... : Can you please explain why you feel INPL doesn't add anything? And why does it make any difference whether loans are fully funded or not? The idea of dropping INPL might work OK for smaller investors -- if you pre-fund £100 you can be pretty sure that you'll be allocated that and you won't have deposited money unnecessarily. For investors who pre-fund three- or four-figure amounts, however, and who can't guess what they might be allocated, INPL gives them the opportunity to wait until they know what they've been allocated before taking action to cover their negative balances, either by selling parts or making a deposit. (I accept that if you deposit what turns out to be an excessive amount, you can always make a withdrawal. But if you sell too many parts, you're just out of luck!)
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Post by martin44 on Sept 28, 2016 20:51:21 GMT
By that logic we should stop all forms of insurance and shut down the FSCS etc. It is true that the absence of a safety net makes one much more careful on the high wire, but I fear we live in an age where that is not going to happen. Sadly both insurance and FSCS are also giving the illusion of safety - it's all degrees. Many insurers and banks are equally bankrupt, and the FSCS is underpinned by a bankrupt government. Applying a broken model to a fledgling industry doesn't make it safer, it just makes it more inefficient and less transparent. Yes, we are all doomed...  quite correct, but not as doomed as your prediction i hope.
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Post by martin44 on Sept 28, 2016 20:58:15 GMT
/mod hat off It's not an unpopular view with me. I'd rather have an extra 0.1% or whatever it costs them, and no PF. There is no way the PF can be expected to do what (some) people are expecting it to do, and the 'discretionary' bit just makes for more noise around the topic than we really need. Even the RS one ('non discretionary') generates way more than its fair share of posting and snipings and general worriting. Now that losses are tax deductible there is even less justification for a PF than there was before (when higher rate tax payers suffered badly from a '12% interest .. 6% losses' regime). I'd be quite happy for INPL to vanish too - let's keep prefunding, but you can only actually buy what you have cash for (now THAT is likely to be more unpopular). (i.e. if you prefund £1k and you have £900 in you account, you get allocated £900). Have to say that I agree with both points, I only recently learned that SS had what is called a PF but I don't see that it adds anything to the safety of the business. In fact because it is funded by SS itself then it could be argued that it puts an added risk on the company as a whole even if it is discretionary.
With most loans now being fully funded then I agree it is time for INPL to finish as again it doesn't add anything in my opinion, as you say a fair way would be to continue to use prefunding but when the loan goes live the money has to be in your account to get a share of the loan. We get notice before loans going live so accounts can be funded in plenty of time if required.
If a loan defaults to the tune of £1m... would you rather the PF stump up or would you rather the business stump up? edit... Or the lenders?
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ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Sept 28, 2016 22:27:40 GMT
With most loans now being fully funded then I agree it is time for INPL to finish as again it doesn't add anything in my opinion... : Can you please explain why you feel INPL doesn't add anything? And why does it make any difference whether loans are fully funded or not? The idea of dropping INPL might work OK for smaller investors -- if you pre-fund £100 you can be pretty sure that you'll be allocated that and you won't have deposited money unnecessarily. For investors who pre-fund three- or four-figure amounts, however, and who can't guess what they might be allocated, INPL gives them the opportunity to wait until they know what they've been allocated before taking action to cover their negative balances, either by selling parts or making a deposit. (I accept that if you deposit what turns out to be an excessive amount, you can always make a withdrawal. But if you sell too many parts, you're just out of luck!) For me it is exactly as mikes1531 says. As somebody who stopped adding new money into SS a long time ago, removing INPL would remove the thing that enables SS to work for me. I would have to sell loan parts in advance, and when I got allocated £234 instead of £2,340 there'd mostly be nothing left on the SM for me to buy that I would want and I'd be left with over £2K sitting around doing nothing. Equally, I would often have understimated the amount I needed to sell. I quite often get allocated more of a loan than I'd have guessed because fewer people turn out to want it; in those cases it might become available on the SM, but generally most of us aren't sitting around poised over the SM at the moment a loan actually goes live. SS would have become pretty much impossible to use for me. The only way it could work would be if I had something more predictable as an allocation amount. I'm happy to leave small amounts of money doing nothing, but not several £K. I have neither the bandwidth in my life, nor the inclination to keep withdrawing and re-depositing money that may or may not turn out to be needed, and I also think it wastes a lot of SS time to implement that. I accept it might disappear one day, and I'd have to lump it, but it is certainly still very, very valuable to some of us for perfectly legitimate reasons.
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Post by martin44 on Sept 28, 2016 22:58:19 GMT
By that logic we should stop all forms of insurance and shut down the FSCS etc. It is true that the absence of a safety net makes one much more careful on the high wire, but I fear we live in an age where that is not going to happen. Sadly both insurance and FSCS are also giving the illusion of safety - it's all degrees. Many insurers and banks are equally bankrupt, and the FSCS is underpinned by a bankrupt government. Applying a broken model to a fledgling industry doesn't make it safer, it just makes it more inefficient and less transparent. Yes, we are all doomed... can you expand on your comments please, which banks and insurers, and why do you consider the gov bankrupt?
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Post by martin44 on Sept 28, 2016 23:33:18 GMT
arbster can you expand on your comments please, which banks and insurers, and why do you consider the gov bankrupt? Perhaps consider this and thisnot exactly an expansion by arbster and most certainly not an expansion on my comment, bankruptcy's  ? think not. Deutsche Bank going bankrupt... think not.  your second link leads to nothing other than your opinion on what may or may not happen to barclays bank, again bankrupt barclays?.. i think not. Too big. as per 2008. will always be bailed out by the bankrupt gov.
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adrianc
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Post by adrianc on Sept 29, 2016 7:29:06 GMT
Sadly both insurance and FSCS are also giving the illusion of safety - it's all degrees. Many insurers and banks are equally bankrupt, and the FSCS is underpinned by a bankrupt government. Applying a broken model to a fledgling industry doesn't make it safer, it just makes it more inefficient and less transparent. Yes, we are all doomed... can you expand on your comments please, which banks and insurers, and why do you consider the gov bankrupt? UK government debt is about 200% of annual government income, and the cost of servicing it is about 6% of government income. The debt is currently rising each year by around 9% of government income, down from a peak of about 27% in 2009. Doesn't sound terribly healthy, but doesn't sound particularly bankrupt.
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Sept 29, 2016 7:40:23 GMT
For me it is exactly as mikes1531 says. As somebody who stopped adding new money into SS a long time ago, removing INPL would remove the thing that enables SS to work for me. I would have to sell loan parts in advance, and when I got allocated £234 instead of £2,340 there'd mostly be nothing left on the SM for me to buy that I would want and I'd be left with over £2K sitting around doing nothing. Equally, I would often have understimated the amount I needed to sell. I quite often get allocated more of a loan than I'd have guessed because fewer people turn out to want it; in those cases it might become available on the SM, but generally most of us aren't sitting around poised over the SM at the moment a loan actually goes live. SS would have become pretty much impossible to use for me. The only way it could work would be if I had something more predictable as an allocation amount. I'm happy to leave small amounts of money doing nothing, but not several £K. I have neither the bandwidth in my life, nor the inclination to keep withdrawing and re-depositing money that may or may not turn out to be needed, and I also think it wastes a lot of SS time to implement that. I accept it might disappear one day, and I'd have to lump it, but it is certainly still very, very valuable to some of us for perfectly legitimate reasons. If you have been fully invested in SS for a long time why do do keep churning your holdings? Is it that you have no confidence that loans will be repaid so want to change short dated ones for long dated ones on the greater fool theory? If you have such little confidence in the platform maybe you would be better to invest elsewhere. If the whole house of cards comes tumbling down you will be in the worst situation holding lots of long dated loans. Otherwise why not wait for your loans to repay and use this money to buy new ones? The SM was intended to provide liquidity not to facilitate churn.
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SteveT
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Post by SteveT on Sept 29, 2016 7:57:30 GMT
I churn my loans too because it's the logical thing to do. Given that interest is retained at drawdown, it is self-evident that risk of default is lower in the early months of a loan than at the end. In a perfect market, the rate of return to lenders would therefore be lower near the start of a loan than towards the end. However, given that the rate is fixed at a constant 12%, churning loans reduces risk whilst maintaining return. To my mind, balancing risk and return is what P2P lending is all about (or any form of investment, for that matter).
Your argument that platform risk dictates holding shorter term loans is a curious one. I remain happy to churn loans BECAUSE I am comfortable that platform risk is lower than individual loan risk. That said, there are a fair number of loans that I'm happy to hold to term and beyond, where I believe the risk of loss given default is significantly lower than the loan book average.
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arbster
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Post by arbster on Sept 29, 2016 7:59:27 GMT
arbster can you expand on your comments please, which banks and insurers, and why do you consider the gov bankrupt? UK government debt is about 200% of annual government income, and the cost of servicing it is about 6% of government income. The debt is currently rising each year by around 9% of government income, down from a peak of about 27% in 2009. Doesn't sound terribly healthy, but doesn't sound particularly bankrupt. The problem is, that's just the "official", reported debt. The real debt is a much, much greater. Some studies suggest it's only 300% of national GDP, while others suggest it's more like 500%, or more. That's GDP, not government income. That's 3-5 times the earning capacity of the whole country! What is this hidden, secret debt? Simple stuff like public sector pension schemes - all those fat, defined benefit schemes some of which are being drawn today, many of which are yet to start to be drawn - the State Pension itself, the projected costs of the NHS, PFI liabilities, and the unquantifiable cost of things like the FSCS, and, as martin likes to say, the huge perceived obligation to bail out any bank deemed "too big to fail"! There is no huge pot of money set aside to pay for the public sector pensions or state pensions of current or future pensioners - it requires future tax revenues to fund it. As adrianc points out, official debt is rising every year, and with an ageing population so are these unofficial obligations. We're leveraged up to the eyeballs and it's getting worse. The definition of bankrupt is someone that is declared unable to service their debts; I'll concede that we're not officially unable to service our official debts, but that's only because of the massive efforts of equally bankrupt governments and banks to keep up appearances. The next economic crisis will find governments in a much worse position that the last one, and we should all be asking whether we want the taxpayer - all of us, and future generations - to be saddled with even more debt which can only come from higher taxes and more "austerity" measures. All this to protect a broken banking system run by multi-millionaires reassured that their "too big to fail" organisations will be bailed out once again, with no real impact to their personal wealth.
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SteveT
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Post by SteveT on Sept 29, 2016 8:06:54 GMT
Except that much of the "secret debt" you list, often referred to as "unfunded promises", would not satisfy the legal definition of a debt since it can be reduced or cancelled altogether by future governments. Witness the way the state pension age has been ratcheted up as the cost of funding past "promises" has become unsustainable.
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adrianc
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Post by adrianc on Sept 29, 2016 8:10:14 GMT
UK government debt is about 200% of annual government income, and the cost of servicing it is about 6% of government income. The debt is currently rising each year by around 9% of government income, down from a peak of about 27% in 2009. Doesn't sound terribly healthy, but doesn't sound particularly bankrupt. The problem is, that's just the "official", reported debt. The real debt is a much, much greater. Some studies suggest it's only 300% of national GDP, while others suggest it's more like 500%, or more. That's GDP, not government income. That's 3-5 times the earning capacity of the whole country! What is this hidden, secret debt? Well, yes, of course if you ignore the official and well-documented figures in favour of random conspiracy theories unsupported by any kind of fact... If you're suggesting that the REAL debt is 5x GDP, then that's about 15x the "official" figure. That's quite some discrepancy...
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arbster
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Post by arbster on Sept 29, 2016 8:10:46 GMT
Except that much of the "secret debt" you list, often referred to as "unfunded promises", would not satisfy the legal definition of a debt since it can be reduced or cancelled altogether by future governments. Witness the way the state pension age has been ratcheted up as the cost of funding past "promises" has become unsustainable. That's also fair. And clearly the UK government is not technically bankrupt either. However, if we basically say that everything is fine, and the UK government can afford to bail out Barclays or whomever, and cover the FSCS, so long as everyone is happy to forfeit their public sector pensions and work until they're 85 (or whatever) it really doesn't sound very appealing...
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ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Sept 29, 2016 9:58:31 GMT
For me it is exactly as mikes1531 says. As somebody who stopped adding new money into SS a long time ago, removing INPL would remove the thing that enables SS to work for me. I would have to sell loan parts in advance, and when I got allocated £234 instead of £2,340 there'd mostly be nothing left on the SM for me to buy that I would want and I'd be left with over £2K sitting around doing nothing. Equally, I would often have understimated the amount I needed to sell. I quite often get allocated more of a loan than I'd have guessed because fewer people turn out to want it; in those cases it might become available on the SM, but generally most of us aren't sitting around poised over the SM at the moment a loan actually goes live. SS would have become pretty much impossible to use for me. The only way it could work would be if I had something more predictable as an allocation amount. I'm happy to leave small amounts of money doing nothing, but not several £K. I have neither the bandwidth in my life, nor the inclination to keep withdrawing and re-depositing money that may or may not turn out to be needed, and I also think it wastes a lot of SS time to implement that. I accept it might disappear one day, and I'd have to lump it, but it is certainly still very, very valuable to some of us for perfectly legitimate reasons. If you have been fully invested in SS for a long time why do do keep churning your holdings? Is it that you have no confidence that loans will be repaid so want to change short dated ones for long dated ones on the greater fool theory? If you have such little confidence in the platform maybe you would be better to invest elsewhere. If the whole house of cards comes tumbling down you will be in the worst situation holding lots of long dated loans. Otherwise why not wait for your loans to repay and use this money to buy new ones? The SM was intended to provide liquidity not to facilitate churn. Such a lot of assumptions behind those words. I have great confidence in the platform in fact; this has not changed since I was pretty much a lone supporter on the forum when SS first opened their doors and since I was the first person to effect a sale on the new SM when it was introduced. All through the regularly repeated doom and gloom cycles and occasional outpourings of apoplectic rage of one sort or another, my confidence in and support of SS has not wavered. I didn't stop taking on new loans when some went negative, neither during the great glut of June 2016, as many lenders do/did. SteveT outlined some of the reasons why I churn, but it is also so that I have control of when the money comes back to me so that I can re-invest it or take it out according to my needs. The SM brings in new money to the platform every bit as much as new loans do, and for that reason it is a great positive to the platform that those of us who've been around long enough to have a mature loan book regularly place desirable loan chunks onto the market. I know many lenders (perhaps including yourself littleoldlady?) wouldn't have so easily got their own loanbook established so well if we all held on to our loans till maturity. And I wonder why you assume I have a loan book full only of long-dated loans? I said that I sell loan parts to fund my new purchases, but not which ones. Indeed, sometimes I sell loan parts with more days to run than the ones I am paying for, and even buy loan parts on the SM with negative days to run now and again. We each have our own way of running our various investment portfolios, and favouring one over another does not constitute a lack of confidence in the platform. Equally, we each have our own view of risk, our understanding of it and our tolerance to it. The SM functions well because what one lender perceives to be risky another does not. Rather than wanting every other lender to have my own world view, I embrace the vitality that the differing views bring to the market. (A body who deals in risk day in day out could take offence at being essentially accused of being unaware of the risks they are or are not running here )
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Post by chrisuk on Sept 29, 2016 13:41:24 GMT
By that logic we should stop all forms of insurance and shut down the FSCS etc. It is true that the absence of a safety net makes one much more careful on the high wire, but I fear we live in an age where that is not going to happen. Sadly both insurance and FSCS are also giving the illusion of safety - it's all degrees. Many insurers and banks are equally bankrupt, and the FSCS is underpinned by a bankrupt government. Applying a broken model to a fledgling industry doesn't make it safer, it just makes it more inefficient and less transparent. Yes, we are all doomed... I have had experience in claiming from the FSCS and I can confirm the process is not as simple as they pretend. In fact they make you jump through hoops and the amount of paperwork you have to complete is beyond belief!! I found them unbelievably incompetent and they would try every trick in the book to not pay out. They originally refused to compensate me and other investors for bad advice from an IFA until we threatened them with a Judicial review of their decision. They immediately changed their minds and paid out. The process took 5 years!! The worst 5 years of my life!!
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? think not. Deutsche Bank going bankrupt... think not. 
