baz657
Member of DD Central
Posts: 499
Likes: 187
|
Post by baz657 on May 2, 2014 19:17:48 GMT
Based on what's been, frankly, easily discovered in this topic can we even trust the team at FC? It looks like this individual is running rings around the credit team and they can't see the wood for the trees. It is so easy to get a loan on FC - I know because I did. Some of you might have invested in my company which was given an A+ rating. Ratings can be deceiving though. I'm not going to "bounce" the loan (5173 if you're panicking and should be paid off in a couple of months) but somebody easily could in the same situation. Having spare personal cash made me look into investing, giving a massive V sign to the banks and helping genuine British business in the process. I'm now worried having seen things from both sides. |
|
wysiati
Member of DD Central
Posts: 397
Likes: 86
|
Post by wysiati on May 2, 2014 19:46:09 GMT
Some of the other platforms have in the past criticised FC for being a bunch of 'box tickers' who do not get to know businesses and so reject many viable borrowers.
In some respects it has now gone the other way perhaps in part as FC appears to be so model-led. Their data miners have been adjusting their credit model to the extent that elements such as credit scoring have been de-emphasised and there is now no minimum credit score required to get a loan on the FC platform (that is perhaps the key reason why you see more and more applications from businesses with rock-bottom scores even in presumed lower risk bands). The borrower for loan 5173 shows strong Experian Delphi scores mainly >90 for the past 12 months. On Creditsafe the same business shows a rating of 39/100 (Credit against collateral) but even were FC using this other database it would probably not prevent acceptance at A+.
FC wants to fund more loans and, provided it continues to achieve its bad debt estimates, one might expect the boundaries to continue to be tested as/if the model dictates - like it or not.
|
|
|
|
Post by davee39 on May 3, 2014 7:28:55 GMT
I consider real businesses to be ones which add value. Ideally this would be a manufacturer looking for new machinery or something like a retailer entering an export market. Now the listings are for semi literate woolly financial design consulting lawyer scrap dealing cow fatteners, none of whom contribute anything to the economy or deserve a penny of government cash. Following the Adam Smith rules of Capitalism I apply self interest and give some this C*** my odd £20 if the price is right and a quick loan sale is likely. Sadly FC is nor going to be the financial solution to helping manufacturers and making a real economic contribution.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on May 3, 2014 8:35:16 GMT
FC wants to fund more loans and, provided it continues to achieve its bad debt estimates, one might expect the boundaries to continue to be tested as/if the model dictates - like it or not. This is the real essence of the problem for lenders identified by wysiati. To spell it out a bit (as I understand it). FC is funded by by venture capital, which is always focussed on the timing of its exit and the return on investment at exit. The value of the company is proportional to the size of the loan book, and the risk in the loan book is of secondary importance because the loan book is not purchased. The return to the lenders just has to be adequate, and individual lenders means increasingly autobidders who do not trouble FC. But it is depressing when the one department, collections and insolvency, which should be wholly on the lenders' side and is paid 1% by lenders for its services, seems to think that is should balance the interests of the lenders and borrowers (if you read the posts on 4907 in another place). For FC, borrowers are customers and lenders are a source of funds. After the recent failure to hold growth sustainably, diligence is not going to improve. Maybe the whole loans project and the scrutiny of the new lenders will actually help here. What would they say about 4907 or 6034/43?
|
|
merlin
Minor shareholder in Assetz and many other companies.
Posts: 902 
Likes: 302
|
Post by merlin on May 3, 2014 17:54:12 GMT
FC wants to fund more loans and, provided it continues to achieve its bad debt estimates, one might expect the boundaries to continue to be tested as/if the model dictates - like it or not. This is the real essence of the problem for lenders identified by wysiati. To spell it out a bit (as I understand it). FC is funded by by venture capital, which is always focussed on the timing of its exit and the return on investment at exit. The value of the company is proportional to the size of the loan book, and the risk in the loan book is of secondary importance because the loan book is not purchased. The return to the lenders just has to be adequate, and individual lenders means increasingly autobidders who do not trouble FC. But it is depressing when the one department, collections and insolvency, which should be wholly on the lenders' side and is paid 1% by lenders for its services, seems to think that is should balance the interests of the lenders and borrowers (if you read the posts on 4907 in another place). For FC, borrowers are customers and lenders are a source of funds. After the recent failure to hold growth sustainably, diligence is not going to improve. Maybe the whole loans project and the scrutiny of the new lenders will actually help here. What would they say about 4097 or 6034/43? As usual blender I agree with what you have said. However there is one other aspect that they should (if they have any sense) be considering assuming they want to continue in business a lot longer and not just dump and run when the balance sheet looks tasty. That is the FCA licence to operate in the P2P field. Currently all P2P businesses are running on a "provisional" type licence and will soon have to apply for a "full" licence. I am not sure when and how this will happen but if the FCA has receive lots of complaints from the likes of us about poor DD and poor debt recovery then my guess is they wont get their licence renewed. If this happened to FC, its balance sheet would go straight down the toilet. I very much doubt that their backers would be too chuffed about that!
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on May 3, 2014 19:52:46 GMT
I meant 4907, apologies to 4097 (whoever that is).
I think venture capital always looks for its eventual exit before entry and drives the business towards the promised golden goodbye. Yes I agree that a full operating licence would be a desirable asset but do not personally know the procedure. I doubt that a few malcontents, as it would be portrayed, would have much leverage if the loan book performs as FC has predicted, in terms of losses, and if the returns are seen as satisfactory by the vast majority of lenders, who do not examine the detail of the losses. It's just detail which could drive small improvements. Credit assessment and collections are just costs to FC, they do not generate income. Those costs are to be kept to the minimum commensurate with adequate performance, not to be increased to maximise the return to lenders. Nothing unexpected in this - the model drives it. We have to make our voice heard by FC directly.
|
|
merlin
Minor shareholder in Assetz and many other companies.
Posts: 902
Likes: 302
|
Post by merlin on May 4, 2014 11:55:22 GMT
I am not aware of what is required by the FCA regarding the grant of a full licence to trade in the P2P market. However it was quite clear during the grant of the provisional licence that quite a few things that FC and others were not doing well or not at all, would be required to be established at the full registration stage. Much of this I think comes under the heading of "a duty of care" in respect of client monies but includes having a well formed "recoveries procedure" in place when a default occurs and clients are about to lose all or part of their investments. If you remember just before 1st April (the day regulation came into force) FC announced significant changes in respect of dealing with defaults and did start to improve communication with lenders. Now under the banner of "duty of care" 6034/43 appears to ably demonstrate almost total lack of care by FC in heavily moderating valid questions to the borrower and to FC as well as ignoring the obvious as pointed out by potential investors. If this loan and maybe the previous loan does go belly up FC simply will not even have a wooden leg to stand on. This would then fly in the face of the spirit of what the FCA have set about to establish though codes of conduct and registration.
Incidentally if anyone does want to take this matter the procedure is to first register a complaint with FC. If FC do not reply or the answer you get is not satisfactory complain to the Financial Ombudsman (FO) and they should take up your case. Even if you are not happy at the moment with how this is being handled you can still make a complaint to the FO and particularly so if the complaint is about the general nature of the organisation your are having grief with.
PS If you think you may either now, or in the future wish to take matters further, do make a copy of the Q & A's before they vanish!
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on May 4, 2014 12:58:17 GMT
That is useful information, thanks. The fact that terms and conditions which once applied disappear from the site, without being archived, and we are obliged to accept new ones generated unilaterally by FC and applying retroactively to our portfolios is in itself something one might complain about. Even the right to sell up and go if you do not like the terms is not acknowledged.
Note that the statement about being able to sell your loans at par in an average of 48hours disappeared without trace just before regulation. We still have contractual rights to expectations based on it.
4907 may eventually go to the regulator -FC clearly failed to find pre-existing CCJs, and then took no action to secure the lenders against an ineligible loan, until the administration. The guarantor may pay up, of course. This forum is important as a record which is out of reach of FC. We must cherish it, archive it, and stick to its rules.
I still think that we should expect FC to act on matters which could lead to difficulties with the regulator, before that becomes necessary. I wish them to take all the actions necessary for a full and successful licence. My savings are at stake.
|
|
merlin
Minor shareholder in Assetz and many other companies.
Posts: 902
Likes: 302
|
Post by merlin on May 4, 2014 14:48:11 GMT
Yes, agreed again but there is one point I should make. That is, I believe that the FCA see the current state of affairs in the P2P World as an "evolving" one. So that they are watching what happens in that market and will eventually "regulate that business appropriately." You may remember that last year the FCA sought input from anybody interested in the Crowd Funding market prior to eventually issuing guidelines for provisional regulation on 1st April. This does not mean that the matter is now closed as it would appear they are still seeking input as the market is an "evolving one" in order to keep up to date. So writing to them about P2P problems, marked for the attention of the Crowd Funding Department would possibly be useful in the long term. 4907 would indeed be an excellent example of FC failing to look after the investors interests and 6034/43 should also be of interest too but for different reason at this stage.
This is not a war against FC or any other P2P business but is an attempt to get things working in a fair and equitable manner for all concerned. Yes I would like to see FC succeed and move into healthy profit but I would also like it to "play fair" with lenders and carry out reasonable due diligence on the loans it offers and to do more to recover our money when loans default. This fits closely with what I think the FCA are trying to achieve through regulation and the sooner the better.
Incidentally I had contact with the FCA during the consultation stage last autumn and I found them to be very interested in personal experiences in the P2P business from an investors perspective.
|
|
|
|
Post by aloanatlast on May 4, 2014 15:40:51 GMT
It's been said (was it on this forum?) that small businesses float on waves of hysterical optimism. It's also been said that many small businesses are only as good as their next contract. Most don't actually have the resources to carry the risks that their trade involves, so they just chance it. Often they get away with it, but sometimes they get unlucky. If they had to do a risk analysis, they wouldn't exist.
So on the whole I trust to luck. I don't look for "safe" businesses, because I wouldn't find many, and I don't expect FC to have a crystal ball that picks the unlucky ones.
But that's proper businesses - honest businesses with a genuine product and trade. There are other businesses that I don't want to lend to, whether I get my money back or not. They would include for instance receivers of stolen goods, tax evaders, businesses that fleece other businesses, etc.
Then there are start-ups. FC say they don't do start-ups, but some of their borrowers have been pretty close. I seem to remember a railbus maker that had only sold one vehicle - was there any visible income stream? And I let myself get caught by the pedal-car showroom in spite of not having much confidence in it (the name should have been enough warning).
And the anonymous loans. FC is quite categorical that they accept no liability for their lending decisions - lenders lend on their own responsibility. How does that work if the borrower is anonymous? Sorry, but borrowers who want privacy need to find themselves another lending firm.
What I need from FC are some lines in the sand, which they don't cross. Otherwise I have to check every loan myself, and I can't do that.
My suspicion though is that they don't employ enough people, and the person-hours available per loan application (including all the rejected applications) just isn't enough.
|
|
