dorset
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Post by dorset on Jun 2, 2014 19:12:36 GMT
No surprise here it was only a matter of time. In fact there is no way that P2P could grow to the next level relying on punters such as ourselves.
Likewise owners of P2P platforms do not owe us any favours from our helping them get off of the ground; it has all been to our mutual benefit. I have no feeling of loyalty to any platform (bit of a soft spot for RS however) and will simply move on if better prospects come up.
Overall it is an early sign of a sector starting to move to some form of maturity. Is it good or bad for forum members? Far too early to say IMO.
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blender
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Post by blender on Jun 2, 2014 19:19:19 GMT
... Banana?? (or maybe you prefer some apple sauce). 
I am an omnivore, but quite fancy some fruit with the monkey meat, thanks Grumps. Thanks for the replies on tax. I think that if we are looking forward to running our own ISAs directly on the FC platform in a year or two (my knowledge of other platforms is limited) then we might as well whistle for it. A P2P operator has enough to do in developing and growing the front end in this new market sector without also getting involved in the world of tax-efficient investment vehicles at the back end. If they make this available only through whole loans and third parties, who already have the skills, a market position, regulatory compliance and oversight, and the ability to mix with other investment types, then they can diversify the funding sources and concentrate their resources on growing the loan business. From a tax point of view I assume that there is no difference in principle between an individual directly holding loan stock in a PLC and many loan parts in SMEs. There cannot be special beneficial tax arrangements for the latter, and I think the argument will be all about the ISA providers and their packaging of loans rather than anything fundamental about the tax treatment of loans. Or again that may be rubbish.
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Post by westonkevRS on Jun 2, 2014 21:37:59 GMT
Here's a link to an article in The Evening Standard that Rhydian has direct input into; www.standard.co.uk/business/markets/anthony-hilton-end-of-the-peertopeer-is-a-long-way-off-9439550.html"But the most dramatic innovation came the week before last when Marshall Wace, best known as a manager of hedge funds, announced that it was going to raise £200 million on the Stock Exchange for a company which would invest in loans introduced to it by peer-to-peer lending platforms. The idea is that the new fund will have a presence on the platforms of existing peer-to-peer lenders such as RateSetter and Funding Circle and will use its own computer-driven expertise to select the loans it likes. Obviously this opens the door to funding larger loans. On one level it is remarkable that an innovation of this scale is taking place in such a young industry and is testament to the continued dynamism of the financial sector. But on another level, the arrival of institutional money brings the danger that individuals will be squeezed out and the city financiers will take over. RateSetter is determined that this will not happen and will continue its steady build-up of a network of individuals willing to lend. It is a hard slog but in the end it should provide a lasting competitive edge in that borrowing for individuals will be cheaper than from city institutions. One hopes the firm is right. The continued travails of the banks suggest there is room for both."
I know that Rhydian feels very passionate about the equality of our markets and the primary importance of the P in P2P. I can't speak fir the other platforms, but this is fundamental to who we are.
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jimbo
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Post by jimbo on Jun 2, 2014 23:04:18 GMT
To be honest guys, this isn't new news. It has already been happening over the last year. If you read the annual report of GLI Finance, you'll see they are already taking stakes in loans on the platforms they partially own, including Platform Black and Funding Knight. I've suspected for some time that the larger loan stakes on FK are GLI Finance. This has been a positive for FK though, as it has kept rates for borrowers reasonable while still allowing retail investors to score yields of up to 11%. True, yields would have been higher if they hadn't been involved, but then FK could have ended up in a Rebuilding Society situation of high rates and some loans failing to fill (according to some posts on this forum). A degree of corporate/institutional involvement is therefore helping to nurture and support platform growth.
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pikestaff
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Post by pikestaff on Jun 2, 2014 23:42:49 GMT
...From a tax point of view I assume that there is no difference in principle between an individual directly holding loan stock in a PLC and many loan parts in SMEs... The investment trust is offering shares, not loan stock. However, I can see no obvious reason why a PLC could not offer loan stock secured on a portfolio of p2b loan parts. There are in fact some significant differences for individuals between the taxation of loan stock and the taxation of p2b loan parts, but this will not matter if they are held in a tax free wrapper such as an ISA or a SIPP. The differences arise because loan stock will generally be a "qualifying corporate bond" (QCB) for tax purposes, whereas p2b loan parts will generally be "simple debts". The main points are: - As is well known, losses on p2b loan parts are not deductible against income but may in most cases be claimed as capital losses by those investors lucky enough to have taxable capital gains. There is no loss relief at all on QCBs (which are exempt from capital gains tax).
- Interest on simple debts is taxed on a pure cash basis. Interest on QCBs is also taxed on a cash basis, but adjusted for accrued income on purchases and sales.
- There are a bunch of anti-avoidance rules on QCBs to prevent taxable income being turned into tax-free capital gains.
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blender
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Post by blender on Jun 3, 2014 7:16:27 GMT
Thanks, Pikestaff. I have learned something today already - the forum does its job.
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JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Jun 3, 2014 7:37:10 GMT
Bondora already have an institutional investor of this type. Under their recently changed profile bidding system this investor is allowed 20% of loan size or 500€ in the loans they choose to be part of.
Unfortunately for the rest of us they only bid on the loans that people see as the safest, because of previous low defaults. As these loans are much in demand there is a very long queue of private investors trying to get loan parts, so we are only allocated one of these loans very occasionally, whereas the institution is in every time. The result is that we now have to take on less attractive loans to be able to reinvest repayments or add additional funds.
Before the bidding system change the preference was not so obvious, as others could obtain more of the loans by offering a lower rate than the institution, whereas they now take the first slice.
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markr
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Post by markr on Jun 3, 2014 8:08:16 GMT
I don't see this as a bad thing at all. Yes, there's likely to be a fall in rates, but there's also a fall in platform risk. If a major P2P platform went under its lenders are almost certainly going to lose money (or at least not see the expected returns) despite the FCA mandated protection, and it would shake confidence in the sector enough to probably take some other platforms down as well. P2P is running out of "retail" money, so if the institutional money allows the sector to grow to sustainable levels without any casualties I'm all for it.
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blender
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Post by blender on Jun 3, 2014 12:00:29 GMT
Agreed and I made a similar point above about the investment funds having beneficial effects on chasing payments and defaults generally. It is a fundamental potential problem with P2P that the platforms will see the borrowers as fee-paying customers and will have no direct risk from the loan book. If the lenders are small and numerous and just a source of funds then it is difficult for their collective voice to be heard, and easy to ignore and lose the few noisy ones. A few big lenders, who cannot be ignored or lost, can change the balance between lenders and borrowers as well as provide the operational scrutiny that small lenders cannot. We just have to avoid preferencial tretment.
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Post by emoney on Jun 3, 2014 14:37:02 GMT
Good afternoon Ladies and Gents. If you follow what's been going on in the USA you will see that this is not something new and should be welcomed. The market is still very much in it's infancy and until the Private/Retail NISA and Pension monies start to flow onto the platforms in scale, new liquidity to the sector will be welcomed by all stakeholders to deal with increasing borrower demand. It will come as no surprise that the proposed P2P Fund's anticipated yields are based on a spread of lending risks. At eMoneyUnion we have a spread of between 5 and 15 % (little video and explanation www.emoneyunion.com/lend/yields-and-risk-rating/ ) and if the lender support is not there at certain risk grades when our borrowers get approved, then the specialist financial institutions would then become the borrowers best friends. The Peer to Peer/Crowdfunding movement is absolutely bouncing at the minute, and People to People lending is at the heart of everything we and all other platforms do. I would love for us to have a 1000 millionaires lending on our platform to provide an alternative to the £170BN p.a. consumer credit market, however for the movement to be a real alternative, collaborations with institutions is a necessary evil, that is unless someone can email the Sunday Times Rich List? |
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blender
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Post by blender on Jun 3, 2014 19:32:09 GMT
... collaborations with institutions is a necessary evil, ... A 'necessary evil' seems a bit strong - but it is perhaps comforting to know that the platforms might be more worried about 'supping with the devil' than the lenders are.
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Post by emoney on Jun 4, 2014 15:49:44 GMT
Death and Taxes, and a little humour along the way" A bank is a place that will lend you money if you can prove that you don't need it. ~Bob Hope"
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blender
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Post by blender on Jun 4, 2014 22:02:33 GMT
And a bank will want real security on top of that. Whereas a P2P lender will lend if he/she believes in the pitch by the business owner, and to demonstrate that belief requires no security.
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Jun 4, 2014 22:42:00 GMT
And a bank will want real security on top of that. Whereas a P2P lender will lend if he/she believes in the pitch by the business owner, and to demonstrate that belief requires no security. Hi blender, please may I offer a small but relevant edit of your above post - And a bank will want real security "and some" on top of that. ... ....
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JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Jun 5, 2014 6:34:23 GMT
Oh! I thought that was what a p2p lender looked for to lend at under 20%.
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