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Post by d_saver on Dec 27, 2016 10:43:05 GMT
Hi,
I guess a lot of people are using the QAA essentially as a bank account. A home for cash that can be withdrawn pretty quickly, almost like a bank account. It is of course not a bank account and has the risk associated with p2p. There are some innovative features in it though that are tempting me to use it more and more for larger sums in this fashion.
So my question is, how comfortable are you if you use it this way in the protection offered? Are you happy to invest larger sums that would be covered by the FSCS elsewhere (but with obviously less return)? Have you always been able to get your money out without hassle if needed (even though I understand that might not always be the case)?
Although in a few months I hope to soon be reaching my self imposed limit of what I will risk on p2p for now, I'm considering excluding or altering that limit for sums (perhaps temporarily) held in the qaa as I don't have a home for that cash outside mainstream banks right now.
Thanks for any feedback.
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Post by davee39 on Dec 27, 2016 11:28:31 GMT
I am using RS rolling as an instant access account. Funds are instantly available and in Bank next working day.
I also use both AC instant access and 30 day accounts with no problem. How much you invest depends on how much you trust the platform and how well you see their strategy working.
For next year i hope to see
Full FCA Authorision
Final closure of the early troublesome debts
Another step change increase in Loan origination.
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agent69
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Post by agent69 on Dec 27, 2016 12:32:43 GMT
The problem with the QAA and the 30 day account is that they are black box accounts, with no visibility of what's inside. Current investment in the pair is about £47m, but nobody outside AC towers knows how much: - is held in cash
- is held in distressed loans
- is the greatest exposure to any individual loan
- was earned in interest last month.
Is it possible that there is no money in either fund (all spent on a posh Christmas party at AC HQ) and payments are being met by incoming funds? Unlikely I know, but you know the old adage - If something looks too good to be true .....
And don't forget AC have very little financial exposure to these accounts (other than seed capital in the provision fund), so if things go wrong you will be the one loosing money.
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Post by Butch Cassidy on Dec 27, 2016 13:17:57 GMT
I think that the "it's possible the management will run off with your money, spend it on a Xmas party , divert funds fraudulently" type arguments are a red herring; if you don't trust platforms to abide by FCA rules & act as fit & proper custodians of client funds then you should not invest through them - simple as that.
The lack of disclosure & opaque nature of the operations of these accounts concerns may hold some strength but again it becomes a trust issue; AC clearly don't want to fully exposure the workings of this account to their competitor platforms for sound business reasons & investors must weigh up the risk/return balance against their own tolerance but if you accept that AC are honest, trustworthy & will act with integrity then most concern evaporates.
My biggest concern is the unwieldy nature of the account & it's possible adverse effect on platform stability;
- It essentially replaces underwriters, who provided a valuable independent DD function that benefitted all investors by vetting, questioning & verifying previous loans that would be revised or even refused as a result - It has grown to the level that it needs to consume most eligible loans almost entirely, leaving precious little for MLIA investors, driving away another valuable source of independent DD - It is marketed to BS investors as though it's a deposit account & consequently funds flood in, offering 3.75-4.25% against <0.5% it is very attractive; but should a competitor account offer better terms, or simply a shock spook such investors the stampede for the exit maybe very large indeed & cause a major liquidity crunch in it's wake
Personally I only use the QAA sweep function to hold uninvested cash until MLIA targets can be funded but as a short term deposit account for larger sums I would be comfortable enough as I trust the integrity of AC & currently see a benign outlook for short/medium term economic prospects but that might change at some point in the future, who knows for sure!
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littleoldlady
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Post by littleoldlady on Dec 27, 2016 21:50:53 GMT
The main problem with the QAA and 30 day accounts is that in the unlikely event of the fund suffering a loss which cannot be covered by the PF then some investors will have to bear the loss, but nobody (IMO not even AC) has the slightest idea of how these unlucky losers will be chosen. Cash is continually churning in and out and when a loan turns into a loss it is not an abrupt event it is a long drawn out process. Many loans will show some initial sign of distress but will not default. The odd one which does may take months or even years from that initial sign through receivership and disposal before the loss is crystallised. In that time there will have been a huge number of investors that have held the loan for a period. ISTM that there are only two points in time where it would be possible to allocate the loss or potential loss to the current holders (but neither would work)., The first is at the very first sign of trouble when the loan could be suspended. This would happen too frequently to be feasible and would destroy the liquidity which is the essence of the fund. The other time is the point at which the loss is finally crystallised but nobody in their right mind would keep any money in the fund with that hanging over it. AC seem to have buried their heads in the sand and hope it will never happen. If this point occurs to the FCA they will never get full authorisation IMHO.
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Post by slumberingaccountant on Dec 28, 2016 10:08:49 GMT
The main problem with the QAA and 30 day accounts is that in the unlikely event of the fund suffering a loss which cannot be covered by the PF then some investors will have to bear the loss, but nobody (IMO not even AC) has the slightest idea of how these unlucky losers will be chosen. Cash is continually churning in and out and when a loan turns into a loss it is not an abrupt event it is a long drawn out process. Many loans will show some initial sign of distress but will not default. The odd one which does may take months or even years from that initial sign through receivership and disposal before the loss is crystallised. In that time there will have been a huge number of investors that have held the loan for a period. ISTM that there are only two points in time where it would be possible to allocate the loss or potential loss to the current holders (but neither would work)., The first is at the very first sign of trouble when the loan could be suspended. This would happen too frequently to be feasible and would destroy the liquidity which is the essence of the fund. The other time is the point at which the loss is finally crystallised but nobody in their right mind would keep any money in the fund with that hanging over it. AC seem to have buried their heads in the sand and hope it will never happen. If this point occurs to the FCA they will never get full authorisation IMHO. I completely agree with this analysis. I too cannot comprehend how AC would deal with a default. Because of the lack of transparency investing in QAA doesnt look much like p2p at all. The way things are going, and reading some of the grumblings from the FCA i cannot see full authorisation coming. It sadly looks like the right and left hand of bits of the Government are pulling in opposite directions. We have the Announcement of the 'innovative ISA' shortly followed by FCA deciding that P2P needs a lot more looking at, and as they open it up it gets murkier and murkier.... ( i keep up to a few £thousand in QAA whilst looking for good MLIA homes. with allocations ranging from £30-300 on a £300 request, it can be rather slow though.)
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agent69
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Post by agent69 on Dec 30, 2016 11:17:49 GMT
I think that the "it's possible the management will run off with your money, spend it on a Xmas party , divert funds fraudulently" type arguments are a red herring; I'm certain that Charles Ponzi would have said exactly the same in 1920. In another thread people are wary of getting into the diamond man too deeply because there is no evidence that the security actually exists. I'm surprised that more people don't take a similarly skeptical view of the QAA. My company pension is managed by a company with over 200 years experience, I can see where every penny is invested and if I am unhappy, they will modify my account. Why would anyone invest a large 5 figure sum with a group of newbies with no real track record, no idea what you're invested in and no idea of when you might get any money back. I agree that investment is dependent on platform confidence, but I would be a lot more confident once the platform had gone through the full financial cycle and not just a prolonged bull market.
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SteveT
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Post by SteveT on Dec 30, 2016 11:58:59 GMT
In another thread people are wary of getting into the diamond man too deeply because there is no evidence that the security actually exists. So you're disregarding as worthless the monthly stock listing and bi-monthly verification by external auditors??
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Post by Butch Cassidy on Dec 30, 2016 11:59:36 GMT
I think that the "it's possible the management will run off with your money, spend it on a Xmas party , divert funds fraudulently" type arguments are a red herring; I'm certain that Charles Ponzi would have said exactly the same in 1920. In another thread people are wary of getting into the diamond man too deeply because there is no evidence that the security actually exists. I'm surprised that more people don't take a similarly skeptical view of the QAA. My company pension is managed by a company with over 200 years experience, I can see where every penny is invested and if I am unhappy, they will modify my account. Why would anyone invest a large 5 figure sum with a group of newbies with no real track record, no idea what you're invested in and no idea of when you might get any money back. I agree that investment is dependent on platform confidence, but I would be a lot more confident once the platform had gone through the full financial cycle and not just a prolonged bull market. I would agree a healthy dose of scepticism is always a good starting point, in fact it is where my analysis of any loan opportunity invariably begins, however I have been with AC since the very early days & over that time both my experience & interactions with them have built a strong level of trust in both the platform & management team that they always try to do things "by the book" & comply with not just current FCA procedures but anticipated future regulations as well.
Platform objectives & direction will not always align exactly with investors which is why my portfolio is only c. 40% of it's peak (rates dropping due to pricing for liquidity no longer just risk, MLIA allocations being sidelined in favour of the collective accounts) but I do not doubt the integrity of the platform just no longer share it's direction. It is not in doubt that human error will occur, loans may default, DD procedures & investor communication could always be improved but that will continue to be the case not just for AC but every young platform. I agree that the full economic/financial cycle will throw up some challenges & am certain that a number of platforms will get into trouble & there will be failures; personally I think AC will be one of the stronger platforms that survives but you never know for sure.
Risk is the very reason that P2P can offer such tempting rewards but everyone needs to quantify their own tolerance not just for each loan offering but for the platform & the wider economic outlook as well & invest accordingly; the best advise is if you are uncomfortable or uncertain about a platform or it's operation simply avoid it.
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littleoldlady
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Post by littleoldlady on Dec 30, 2016 22:30:16 GMT
I'm certain that Charles Ponzi would have said exactly the same in 1920. In another thread people are wary of getting into the diamond man too deeply because there is no evidence that the security actually exists. I'm surprised that more people don't take a similarly skeptical view of the QAA. My company pension is managed by a company with over 200 years experience, I can see where every penny is invested and if I am unhappy, they will modify my account. Why would anyone invest a large 5 figure sum with a group of newbies with no real track record, no idea what you're invested in and no idea of when you might get any money back. I agree that investment is dependent on platform confidence, but I would be a lot more confident once the platform had gone through the full financial cycle and not just a prolonged bull market. I would agree a healthy dose of scepticism is always a good starting point, in fact it is where my analysis of any loan opportunity invariably begins, however I have been with AC since the very early days & over that time both my experience & interactions with them have built a strong level of trust in both the platform & management team that they always try to do things "by the book" & comply with not just current FCA procedures but anticipated future regulations as well.
Platform objectives & direction will not always align exactly with investors which is why my portfolio is only c. 40% of it's peak (rates dropping due to pricing for liquidity no longer just risk, MLIA allocations being sidelined in favour of the collective accounts) but I do not doubt the integrity of the platform just no longer share it's direction. It is not in doubt that human error will occur, loans may default, DD procedures & investor communication could always be improved but that will continue to be the case not just for AC but every young platform. I agree that the full economic/financial cycle will throw up some challenges & am certain that a number of platforms will get into trouble & there will be failures; personally I think AC will be one of the stronger platforms that survives but you never know for sure.
Risk is the very reason that P2P can offer such tempting rewards but everyone needs to quantify their own tolerance not just for each loan offering but for the platform & the wider economic outlook as well & invest accordingly; the best advise is if you are uncomfortable or uncertain about a platform or it's operation simply avoid it.
If you have such trust in the platform can you explain why they will not or cannot say which investors will suffer a loss in the scenario above?
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Post by Butch Cassidy on Dec 30, 2016 23:49:13 GMT
Whilst I'm not a spokesman for AC I trust such a scenario has been "war gamed" & I imagine andrewholgate may be able to shed some light on such a situation |
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ilmoro
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Post by ilmoro on Dec 31, 2016 0:13:26 GMT
I thought chris already had, posts in earlier Jan (reply to LOL) & early Feb. Looked at them the other day. Seemed pretty clear to me that last investor remaining got to hold the baby assuming cash, PF, liquid assets all exhausted and there would still be the asset security to recover. Would need a fairly terminal collapse in confidence to reach that point. Does become less liquid once cash element has been withdrawn as would need buyers on other accounts to purchase loans being sold but again I would sy the platform is potentially dead if that scenario isnt feasible. 30DAA is probably the more vunerable as it is a sub-account of the QAA so if QAA investors pulled their cash, 30DDA would be the ones relying on loan sales/PF to wihdraw after the notice period.
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Post by reeknralf on Dec 31, 2016 8:55:36 GMT
In addition to the above, AC probably can't specify exactly how a collapse would be managed, because they are playing a catch-22 game of regulatory arbitrage which precludes it.
They are in essence providing a savings account, but do not have the regulatory approval to provide an actual savings account. What stops it being a true savings account is its having a discretionary fund to compensate investors in loss-making loans. If they stated clearly how such compensation would operate, it would cease to be discretionary, and they would be providing a product for which they don't have the necessary authorisation.
The fact that they are not telling us how a collapse would be managed is not because they don't know, it's because if they told us the product would become illegal.
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littleoldlady
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Post by littleoldlady on Dec 31, 2016 10:57:54 GMT
In addition to the above, AC probably can't specify exactly how a collapse would be managed, because they are playing a catch-22 game of regulatory arbitrage which precludes it. They are in essence providing a savings account, but do not have the regulatory approval to provide an actual savings account. What stops it being a true savings account is its having a discretionary fund to compensate investors in loss-making loans. If they stated clearly how such compensation would operate, it would cease to be discretionary, and they would be providing a product for which they don't have the necessary authorisation. The fact that they are not telling us how a collapse would be managed is not because they don't know, it's because if they told us the product would become illegal. All true but irrelevant to my question which is about the scenario that there is a default bigger than the PF.
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agent69
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Post by agent69 on Dec 31, 2016 11:14:48 GMT
In another thread people are wary of getting into the diamond man too deeply because there is no evidence that the security actually exists. So you're disregarding as worthless the monthly stock listing and bi-monthly verification by external auditors?? I wouldn't place any credence on values derived from stock listings prepared by the borrower (shock horror - borrowers don't always tell the truth) The bi-monthly verification is by the borrower's auditors (not somebody appointed by AC) so I would need more info on how detailed the audit was. I don't know whether £7m in diamonds is a bucket full or a handful, but I would want evidence that the auditor was an expert in valuing the stock and inspected a representative sample during each visit.
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