Immediate Access to your cash and the Hidden Features of QAA

What happens if the security of one loan was miscalculated for whatever reason and the QAA didn't manage to sell out of it in time? If it could only take one loan to absorb the whole of the provision fund (temporarily or not) and lock existing and, worse, future investors in unknowingly, hopefully this paints a clearer picture of the real risks of the QAA and the potential domino effect on other accounts. As a minimum, investors should be given a possibility to check how diversified the QAA is at any one time. Why can Octopus Choice provide absolute transparency for a similar and safer product (and pay a higher rate, which is still too low IMV). I truly wish AC as a company and their lenders no ill, but I continue holding my head in disbelief reading this thread.
I hope it all works out in the end.

In your earlier post you said that The QAA is invested in one loan that is in trouble at present.  Then in your next post you wondered should new QAA investors be prevented from holding old defaulted loans? Here is the essence of the problem. Hopefully all p2p investors realise that there is a risk of loss. But a loan might take many months if not years to progress from first signs of trouble to partial repayment after seizing and disposing of the asset. During this time the QAA may have turned over multiple times, and it appears that only those still in it when the music stops will suffer a loss. Furthermore lenders will not all have the same amount of information about the loan in question, enabling some to get out in time.

One idea would be to put a loan into suspension at the first sign of trouble. All investors at this point in time would see a proportionate amount of their investment moved into the suspension account and not withdrawable (but possibly tradeable?). AC could remove the suspension if the loan remedied, otherwise when it eventually repaid, fully or partially, the funds could be moved back into the QAA.

AIUI the advantage of the QAA is only liquidity, not preference in terms of security against the other accounts. Are you suggesting that the QAA would unload problem loans to the GBBA/GEIA?

The PF is irrelevant to this discussion. It reduces the chance of an investor loss but does not guarantee that there will not be one and this is all about when there is one. If the PF only covers the QAA/30 day and not the others then this is another reason to be in it rather than the others.

Right then we are talking about different subjects. I am addressing the situation where a large loan defaults with a large loss which the PF cannot cover. (If such a situation cannot arise then AC could advertise the QAA as guaranteed but they don't, on the contrary they state very clearly that capital is at risk.) My point is that if this occurred nobody, not even AC, seem to know which investors should suffer the loss. I am not talking about Armageddon, just a large loss, which would likely progress over a long period of time from the first signs until final resolution with different investors holding it via the QAA at different times. 

AIUI, the QAA/30DAA is an incredibly useful source of funding for AC, giving them lots of relatively inexpensive working capital with which to get new loans off the ground.  If that's the case, then they have a increased vested interest in ensuring that these accounts are looked upon favourably by investors, so it wouldn't surprise me if they do absolutely everything they can to ensure liquidity and minimise capital losses, which would mean keeping the PF for these accounts well funded and using the PF to minimise any possible losses.  As such, I'd expect them to rate the level of PF coverage for the QAA/30DAA as being more important than for the GBBA/GEIA.  So, yes, that's a another good reason to invest in the QAA/30DAA in preference to the GBBA/GEIA -- with the interest rate differential being a good reason for doing the opposite. 

littleoldlady:  AIUI, AC cannot say the QAA is guaranteed because, if they did, the PF then would become too much like 'insurance', and insurance providers are heavily regulated in the UK.  AC are not licensed to deal in insurance at the moment, and they probably wouldn't even want to be considering the hoops they'd have to jump through to get a licence and the level of reserves they'd have to maintain.  It's a similar situation to why QAA/30DAA investments are not 'deposits'.  (Because AC isn't a licensed deposit taker and, again, they probably wouldn't want to be for similar reasons.)

Because AC don't deal in insurance or banking, AC have to say that the PF is discretionary, and have to say that your capital is at risk.  They may have every intention of using the PF to cover all QAA/30DAA losses, but they simply are not allowed say that.

To repeat, this is all AIUI.