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Post by elpasi on Feb 5, 2017 19:49:09 GMT
So far, I've had an alright experience of the fee-free sell out. My justification for selling out was completely valid, and truthful. I simply expressed that the risk balance had shifted as a result of this change, and now RateSetter would have a lesser incentive to keep the defaults down, knowing that one trip-up isn't the end of their company. I said that, evaluating that, and considering my positions in other companies, RateSetter had the lowest reward for the risk, and I would not invest in it now, if I was not already. Under those circumstances, I wanted to exit my position.
The supervisor made clear to me that the account would be closed, which I was absolutely fine with. They told me that I had begun the first step in the process, and that they would be in touch in around a week to let me know how things were progressing, trying my phone first, or sending me an email if they couldn't get hold of me on the phone.
I did this back at midday on Feb 2, so they've only had one-and-a-half working days to process it so far, however absolutely nothing has changed by looking at my online account.
I do, however, notice that I didn't ask them the one big question, around whether closing my account would leave my unable to access my tax statement for the year. I'll just have to wait and see how it goes.
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dorset
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Post by dorset on Feb 5, 2017 20:38:05 GMT
I’ve been running down RS for about 18 months now and from a high of £30k I am now at about £10k. The reason for the run off is that the risk does not now cover the return. The big risk as I see it is in the monthly market where RS are borrowing short to lend long. This is the classic banking trap. As the PF starts to drop toward 100% (the trigger point) lenders will stop lending and or seek to withdraw funds which of course will not be available as liquidity disappears.
The proposed changes are a good move on the part of RS as it allows them to keep in business, avoid a resolution event and have a free rein to stuff existing lenders should they so wish to keep the PF above water. It seems from the new rules that they can haircut at will.
I am not going to sell out but will let my balance drift down toward the £5k mark so as to just to keep the account live.
As I see it (please correct if wrong) on outstanding loans of £623 million and a PF of £22.2 million (being 3% or so) it would only take a default change from 3% to 3.5% to trigger the haircut. Odds are that this will certainly happen as soon as the economy takes a dip.
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Post by WestonKevTMP on Feb 5, 2017 22:07:05 GMT
As I see it (please correct if wrong) on outstanding loans of £623 million and a PF of £22.2 million (being 3% or so) it would only take a default change from 3% to 3.5% to trigger the haircut. Odds are that this will certainly happen as soon as the economy takes a dip. I'll be happy to correct you... The current Provision Fund has been amassed from the existing portfolio. Which has already suffered its defaults and is a cleaned book. The current 3% ProvisirFund is net of these historical Decatur. Yes there will be more defaults, but your talking about the default rising from the already book rate, say 3%, to 6%, before a haircut is triggered. All new loans will bring with them new Provision Fund contributions. And if management think the new lifetime default rate is 6%, these new loans will have higher contribution accordingly. I'm not saying their aren't risks involved lending with RateSetter. But they are far from as delicately balanced as a small 0.5%.increase being disastrous. Kevin.
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jimc99
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Post by jimc99 on Feb 6, 2017 3:30:25 GMT
"And if management think the new lifetime default rate is 6%, these new loans will have higher contribution accordingly."
Sounds so easy but.....
..it would take time to build up the pf this way.
..rs are competing with other firms for business and if they become uncompetitive this approach would not work as borrowers would go elsewhere.
..a bad year for borrowers defaulting would quickly reduce the cash pf. Building it up would take several years.
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jimc99
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Post by jimc99 on Feb 6, 2017 10:52:34 GMT
Anyway, back on topic....4 days now and nothing from RS yet.
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DeafEater
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Post by DeafEater on Feb 6, 2017 12:46:46 GMT
4 days now and nothing from RS yet. Well you say that but there's nearly 5m of 'borrower' requests sitting in the rolling market at the moment so they're clearly trying to offload a lot. Exactly how much of that is yours?
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star dust
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Post by star dust on Feb 6, 2017 13:16:36 GMT
I had about about 2/3rds my portfolio in the extinct 3year market, and I've been drawing down over the last year, around 60% of my initial investment has been returned in that time. However, the rump that's left could take a further 2-3 years to all return and be smaller chunks (many sub-£10) and I'd really rather get it all out now to re-invest elsewhere. Eventually getting through to customer services today I've been informed there is no need for me to do anything, my request has been lodged. Management are gauging the level of demand, and are looking at the process, someone will be in touch at an unspecified time in the future, but it will complete before the 1 March. I can continue to withdraw in the meantime. My account will be closed and a note will be made of my request for a tax statement, but I should contact them again in April to request one, I suggested that perhaps they should ensure tax statements are either emailed or posted to those whose accounts are closed through this, and was told the suggestion would be passed to management. I was asked my reason, and said I was already in drawdown, but this further eroded the risk/reward level from my perspective and I wanted to take the opportunity offered. I'm happy to continue withdrawing and wait 'till 1 March or possibly before, to get the rest out. In Edit: Once again thanks to the forum and to jimc99 for starting the thread and the alert, without which I may well have binned the email (as usual) and remained oblivious to the 'offer'.
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Post by brokenbiscuits on Feb 6, 2017 19:11:54 GMT
I've paid sell out fees on a few thousand but still hold a decent chunk that I'm naturally letting run down. Would have loved this offer to sell out a year or so ago, so I could pretend it was the terms and not the dwindling rates that are making me leave.
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mason
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Post by mason on Feb 6, 2017 20:47:47 GMT
Just to add to others comments, when I phoned I was told if I went through with the process I'd not be able to open a RS account in the future. Not a problem for me, but I know there has been some discussion about this.
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jonah
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Post by jonah on Feb 6, 2017 21:10:01 GMT
Just to add to others comments, when I phoned I was told if I went through with the process I'd not be able to open a RS account in the future. Not a problem for me, but I know there has been some discussion about this. Interesting. A real burning of bridges then.
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james
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Post by james on Feb 7, 2017 0:13:52 GMT
Later: RateSetter have clarified in blog responses that there is no need to close the account and no ban. It seems to have been some limited phone responses only, not actual policy.Just to add to others comments, when I phoned I was told if I went through with the process I'd not be able to open a RS account in the future. Not a problem for me, but I know there has been some discussion about this. That looks like a pretty classic case of treating customers unfairly: 1. Hey, we're making changes that worsten the conditions for the investments we've already sold you. 2. So we don't disadvantage you we won't charge the usual outrageous fee for selling them.* 3. But we really don't want you to do that so we'll punish you for it by not letting you have an account again that would let you invest in the new loans under the new terms if that ever makes sense because of the future combination of risk and reward. Even making people close the account looks like revenge and punishment to me. * Maybe. There are three parts to the fee and it remains to be seen if they try to get away with still charging some of it. The three parts are base, cost of pretending you funded a shorter term loan and taking your capital profit if rates have dropped on newer loans. Best not to just trust them to really not charge the whole fee, but check it.
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Post by p2plender on Feb 7, 2017 1:23:03 GMT
I don't blame RS for refusing a future account to those selling out.
Try cashing in a 3 or 5 yr bond for nowt and see what it costs.
You're cashing in for free so be grateful and move on.
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jimc99
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Post by jimc99 on Feb 7, 2017 1:34:58 GMT
Just to add to others comments, when I phoned I was told if I went through with the process I'd not be able to open a RS account in the future. Not a problem for me, but I know there has been some discussion about this. No problem for me either although I quite like the one year term...reasonable interest and only about 1/3 of a percent to sell out if cash needed. I am sure there are other sites happy to take my money, Zopa must be laughing their socks off at the RS antics! Yet another example in my opinion of the muddled and inconsistance of RS management thinking.
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james
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Post by james on Feb 7, 2017 2:00:39 GMT
Later: RateSetter have clarified in blog responses that there is no need to close the account and no ban. It seems to have been some limited phone responses only, not actual policy.I don't blame RS for refusing a future account to those selling out. Try cashing in a 3 or 5 yr bond for nowt and see what it costs. You're cashing in for free so be grateful and move on. If I'm selling out of a three or five year bond after interest rates have dropped as they have at RateSetter I'd make a capital gain on the deal because capital values go up as rates go down, since they are just the inverses of each other. You might not have noticed but the norm in P2P is no fees for selling out. Or in some places usually a profit. Instead RateSetter waives the unusual fee (maybe not all of it, we'll see who gets the capital profit from lower rates, them or the seller) and punishes you for not liking the harmful to you reduction in expected returns for loan contracts you already made. If a business changes the terms of deals it's already made in a way that harms some customers that's not a reason for being vengeful on those who notice and decide that they want to leave just the deals where the terms have been changed to harm them. Npower just hiked rates. Can you imagine the laughter at them and regulatory action if they told switching customers that they could never get their gas or electricity from them again if they switched? Ratesetter's apparent fit of pique or attempt to discourage acting properly is a joke. They should try acting like the grown up regulated business that they are supposed to be these days.
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james
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Post by james on Feb 7, 2017 2:03:21 GMT
I am sure there are other sites happy to take my money, Zopa must be laughing their socks off at the RS antics! Indeed they should be. Their own sell out terms are pretty atrocious as well, though, so the real beneficiaries should really be the majority of platforms which have no fees and often better rates.
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