mikes1531
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Post by mikes1531 on Nov 15, 2014 15:29:28 GMT
Clearly the all new fascistic loan model and revised site is not all we were lead to believe it was. fascistic?? Presuming that wasn't intentional, Dr. Freud would be proud!
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Post by batchoy on Nov 15, 2014 15:49:46 GMT
Clearly the all new fascistic loan model and revised site is not all we were lead to believe it was. fascistic?? Presuming that wasn't intentional, Dr. Freud would be proud! Sometimes the predictive text on my phone.......
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duck
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Post by duck on Nov 15, 2014 16:13:25 GMT
I don't know exactly what overnight processing they were thinking would help, but I see that my accrued interest went up shortly after midnight by a pound or two. That's nowhere near enough to cover the interest that's accrued since the initial loan defaulted, so further updates are required. chris? W Well, at least you got something! I only had accrued interest, having sold my units a while back, yesterday the amount plummeted, but this morning the entire lot together with the loan listing have disappeared from my portfolio. I do hope AC will sort this on Monday. +1, the only sign I have that I held the loan is in completed loans (the original I presume) and the helpful message There is no repayment data for this loan yet.
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Nov 16, 2014 6:17:19 GMT
I don't know exactly what overnight processing they were thinking would help, but I see that my accrued interest went up shortly after midnight by a pound or two. That's nowhere near enough to cover the interest that's accrued since the initial loan defaulted, so further updates are required. chris? W Well, at least you got something! I only had accrued interest, having sold my units a while back, yesterday the amount plummeted, but this morning the entire lot together with the loan listing have disappeared from my portfolio. I do hope AC will sort this on Monday. I think the issue of accrued interest is more complicated. My understanding was that default interest took preference over capital repayment. At least that's what the T&C's of the old software stated. That changed with the T&C's of the new software, which state capital gets repaid before default interest. Therefore it depends on when you sold your holding. I suspect many lenders sold there holding some time ago and therefore should have been paid ahead of the capital repayment that was made last week.
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mikes1531
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Post by mikes1531 on Nov 16, 2014 11:24:57 GMT
My understanding was that default interest took preference over capital repayment. At least that's what the T&C's of the old software stated. I sure hope not. If that were to be so, it would be a disaster for taxpayers. Consider the case of a defaulted loan where the proceeds payable were only enough to return lenders' capital. If capital payments were the priority, the proceeds all would be designated as capital returned and there'd be no tax to pay. If, on the other hand, default interest were the priority then part of the proceeds would be classified as interest -- and it could be a significant part because the resolution of defaults generally takes a while -- and the remainder would be classified as capital. Since the total is the same as the capital-first case, when submitting their tax returns lenders would have interest income to report and an equal amount of capital loss to report. Unfortunately, they then would have to pay tax on the interest 'earned' but they'd be very unlikely to receive any tax relief on the capital loss, so they'd end up out-of-pocket by the amount of tax paid in the interest. That's definitely not ideal! sqh: Do you have a copy of the old Ts&Cs that you can check? If so, can you tell when they were in effect? Also, you refer to them as being "of the old software". I would have thought that the Ts&Cs defined our relationship with AC and would have been independent of the software.
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Post by Ton ⓉⓞⓃ on Nov 16, 2014 13:40:09 GMT
This was their standing in Feb 2014 and it seems to say interest comes before capital.
Old T&C'S Para 11.9 says
My bolds
But as you say hopefully things are different now. When the current T&C's say
My bold
When the old stops exactly is another issue perhaps AC can answer this question
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oldgrumpy
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Post by oldgrumpy on Nov 16, 2014 13:50:12 GMT
Did we have an email from AC to say that terms and conditions on existing transactions had been changed, and how those changes would be administered in the event of their application being applied?
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Post by batchoy on Nov 16, 2014 14:00:03 GMT
Thanks Ton ⓉⓞⓃ, it does create an interesting situation as the two sets of Ts&Cs clearly define different priorities for dispersment of funds and raises a whole array of questions as to which Ts&Cs apply to what when. To answer your question oldgrumpy, not as far as I am aware, I route all my AC related emails to a read only folder to that I can't accidentally delete them and I haven't found anything as yet. |
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Post by batchoy on Nov 16, 2014 16:23:59 GMT
Looking at the current Ts&Cs under 20.2 there should have been a notification on the website at least 30days before the change since the change in order of precedence clearly has the potential to disadvantage members who have accrued interest and particularly those have disposed of their holdings but are still owed accrued interest and I have to say I do not recall seeing such a notice or certainly nothing was flagged when I nave been logging in. The only reason then for not making lenders aware of the changes is that the changes do not affect existing loans i.e. the Ts&Cs at the time Bolton was auctioned still apply and the order of precedence for the dispersment of repayments would appear to be accrued interest before capital.
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mikes1531
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Post by mikes1531 on Nov 16, 2014 19:01:23 GMT
I think I remember there being some discussion in the forum of the tax consequences of the classification of funds received when a recovery was less than total. And I think the conclusion drawn was that the situation as described in the current Ts&Cs was better for lenders in general. I can't remember whether HMRC policies were involved and -- perhaps more importantly -- I can't remember which P2P platform had triggered that discussion. What we probably need at this point is some input from AC -- andrewholgate? -- to tell us when the terms were changed and which terms apply to loans made before the change. |
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sqh
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Post by sqh on Nov 16, 2014 20:43:50 GMT
My understanding was that default interest took preference over capital repayment. At least that's what the T&C's of the old software stated. I sure hope not. If that were to be so, it would be a disaster for taxpayers. Consider the case of a defaulted loan where the proceeds payable were only enough to return lenders' capital. If capital payments were the priority, the proceeds all would be designated as capital returned and there'd be no tax to pay. If, on the other hand, default interest were the priority then part of the proceeds would be classified as interest -- and it could be a significant part because the resolution of defaults generally takes a while -- and the remainder would be classified as capital. Since the total is the same as the capital-first case, when submitting their tax returns lenders would have interest income to report and an equal amount of capital loss to report. Unfortunately, they then would have to pay tax on the interest 'earned' but they'd be very unlikely to receive any tax relief on the capital loss, so they'd end up out-of-pocket by the amount of tax paid in the interest. That's definitely not ideal! sqh: Do you have a copy of the old Ts&Cs that you can check? If so, can you tell when they were in effect? Also, you refer to them as being "of the old software". I would have thought that the Ts&Cs defined our relationship with AC and would have been independent of the software. Sorry Mike I been out all day. Thanks to Ton for providing the answer about old T&C's. I think most lenders will agree that the new T&C's are better than the old T&C's, but I'm still not happy with interest and fees being charged to the borrower on this loan. We are no longer able to see these charges, yet they rank above lender payments. I don't want to discuss it here, but I will refer you to the question I raised on the loan Q&A Sept 3rd, at a time when the borrower payments were displayed. I thought it was a mistake, but the answer suggests not. I think AC should be more transparent about their charges/interest, or rank them below that of lenders capital and probably below lender default interest as well.
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mikeb
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Post by mikeb on Nov 16, 2014 21:06:58 GMT
I think the issue of accrued interest is more complicated. My understanding was that default interest took preference over capital repayment. At least that's what the T&C's of the old software stated. That changed with the T&C's of the new software, which state capital gets repaid before default interest. Therefore it depends on when you sold your holding. I suspect many lenders sold there holding some time ago and therefore should have been paid ahead of the capital repayment that was made last week. The blurb for this repayment/recovery said it would be used to settle outstanding capital ONLY with accrued interest still accruing. DR: "These funds when received will be used in reduction of the capital balance and default interest will continue to accrue on the residual balance" -- it didn't say "will accrue only on the residual balance, and accrued interest on the balance so far will vanish". Whatever the t&c say, that was the deal. And is in fact what happened -- the recovered sum came off the principal outstanding and landed as cash. Job done. *Additionally*, wrongly, and being-looked-into-Monday-ly, the accrued interest total was wiped out. That wasn't part of the deal -- get your capital back but forgo interest to date. It must be a mistake, rather than intention.
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Post by davidricketts1 on Nov 17, 2014 8:54:51 GMT
I think I can explain what's happened (if not why and what chris needs to do to fix it).
The way the repayments are set up all interest is paid at the end (as I and hopefully you would expect). Each time a lump sum reduction is made we need to make some amendments on the system to adjust repayment amounts plus the amount interest continues to accrue on. It appears in doing this that total interest due for the whole term of the loan then accrues over the final phase. Looking at the website total interest due on expiry (which is a notional date only is £23,866.53 and this seems to cover interest at 18% for 4 and a bit months on the £285k + interest at 18% on the reduced balance for a further 3 months.
So everybody who is owed interest should be re-accruing through to the full balance they are owed (again).
Now I didn't say it was right and I'm guessing there must be a fix there somewhere but that is what it looks like to me is happening.
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star dust
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Post by star dust on Nov 17, 2014 12:21:27 GMT
I think I can explain what's happened (if not why and what chris needs to do to fix it).
The way the repayments are set up all interest is paid at the end (as I and hopefully you would expect). Each time a lump sum reduction is made we need to make some amendments on the system to adjust repayment amounts plus the amount interest continues to accrue on. It appears in doing this that total interest due for the whole term of the loan then accrues over the final phase. Looking at the website total interest due on expiry (which is a notional date only is £23,866.53 and this seems to cover interest at 18% for 4 and a bit months on the £285k + interest at 18% on the reduced balance for a further 3 months.
So everybody who is owed interest should be re-accruing through to the full balance they are owed (again).
Now I didn't say it was right and I'm guessing there must be a fix there somewhere but that is what it looks like to me is happening. This may make sense to people who have still got units in this loan, but all mine were sold at the end of August, so I'm not sure it applies to me. I was owed accrued interest @18% prior to my sale, and would still expect to receive this at some point. Prior to the partial repayment of capital I had a loan unit showing, with £0 units but £xx accrued interest. This loan has now been expunged completely from my 'loan book', so I don't quite see how I will re-accrue anything. However, when your new website first launched my accrued interest for this loan (and indeed the loan itself) weren't showing either, so I hope the accrued interest for this loan will be restored to my account soon. Judging by this thread and the Q&A on the website there are quite a few people who are not in the position they were expecting to be after the partial capital repayment, I can only conclude that there hasn't been a complete (or maybe even partial) fix yet, and this is still something that still needs sorting out. Quite why this happened in the first place is another matter!
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duck
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Post by duck on Nov 17, 2014 15:15:32 GMT
similar position although I didn't sell until 26th Oct.
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