ashtondav
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Post by ashtondav on Apr 11, 2017 9:54:08 GMT
Sorry, I missed that. You mean you pay tax on the 8% not the post fee 6.5%?
so at 40% I net 3.3%! I think you're wrong. Surely you pay tax on the post fee, post bad debt return?
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Greenwood2
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Post by Greenwood2 on Apr 11, 2017 10:00:57 GMT
The way BM is structured you pay tax on all the interest earned, before deduction of fees.
Edit: It is explained in your tax statement on the BM site. So very bad for 40% tax payers!
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Post by Deleted on Apr 11, 2017 10:01:08 GMT
yeah sorry, that was a badly worded post by me wasnt it!  I meant the combination lowers returns enough to make me question the worth of my BM investment. With my 'smaller amount', I'd be happy to sit around and see if things improve enough to invest more. But now that BM are raising fees and limits on 'smaller amounts', I have to effectively make a decision now, with current information. And so small is likely to become zero, rather than larger. |
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baz657
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Post by baz657 on Apr 11, 2017 10:25:02 GMT
After starting with the (then) minimum £1000, I've been drip feeding for the past six months, adding a bit more but not before the funds were fully, or near enough, fully invested. I've only just got up to around half the new required minimum. I won't be adding any more.
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ben
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Post by ben on Apr 11, 2017 10:39:06 GMT
As you can imagine, I've been reading all of these messages studiously. I empathise with the disappointment. I don't intend to repeat the rationale as set out in the email and at the start of this forum. But I would like to add the following: this business decision wasn't taken lightly. We pride ourselves on being contactable and responsive to client questions, and it is clear a certain level of client engagement is required with our model (BondMason is a "transparent box" rather than a "black box" as one forum member once stated). Given this, we were presented with a difficult choice: - (1) Significantly reduce client engagement / not engage with clients
- (2) Continue to engage with all clients, increase the minimum to £20-25k+ and keep the fee at 1%
- (3) Continue to engage with all clients, increase the minimum to £5k and increase the blended fee
We opted for choice (3) as we wanted to keep as many of the clients with smaller balances as possible. Personally, I will be sad to see many of the clients with smaller balances leave us - but I understand their decision for doing so, and do feel sorry for clients with smaller balances not able to reach £5k.
For those that do choose to liquidate and continue to invest in P2P Lending land, please stay vigilant - we fear for some bad operators and what they will do this year and next with client's money. This forum can be a very good indicator for troubled waters.
Thankyou for you reply Steve, thinking overnight I have decided to leave, the increase in fees although would cost me I would accept them, after all business need to charge to survive and it is up to us to decide if a company is worth it or not. From a financial point of view the increase in fees would take after tax to about 5% which althoughth I can get more else where is acceptable for a bit of diversity. However I do not wish to be a customer of a company that thinks it is acceptable to kick out customers that have helped them grow and has given them invaluable feedback,to me that is just ungrateful and insulting to them and I do not see the need to get rid of exisiting customers.
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Post by Deleted on Apr 11, 2017 10:46:26 GMT
I think it's worth saying, that despite the upset which this is causing - and understandably so - I am impressed that Steve is posting on here and answering people's questions. That is a decent sign, again, in spite of the changes.
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ashtondav
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Post by ashtondav on Apr 11, 2017 10:58:07 GMT
Sorry, I missed that. You mean you pay tax on the 8% not the post fee 6.5%? so at 40% I net 3.3%! I think you're wrong. Surely you pay tax on the post fee, post bad debt return? So before cash drag and any unplanned bad debt the most I can achieve is 3.3%! Tell me why I would use BM, please. It's a serious question as I currently use zopa+, RS and Fundingsecure, where my post tax returns are quite a bit higher. And I definitely would invest if my pre-tax return was 6.5%, post tax 3.9%
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arbster
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Post by arbster on Apr 11, 2017 11:13:17 GMT
We pride ourselves on being contactable and responsive to client questions, and it is clear a certain level of client engagement is required with our model (BondMason is a "transparent box" rather than a "black box" as one forum member once stated). Given this, we were presented with a difficult choice: - (1) Significantly reduce client engagement / not engage with clients
- (2) Continue to engage with all clients, increase the minimum to £20-25k+ and keep the fee at 1%
- (3) Continue to engage with all clients, increase the minimum to £5k and increase the blended fee
We opted for choice (3) as we wanted to keep as many of the clients with smaller balances as possible.
If I'm entirely honest, I might have preferred (1). The "transparency" of the platform could be delivered through the website, and although minimal visibility of underlying investments is available that is part of the attraction a managed investment service. If not (1), then applying a minimum investment amount of c. £5k might have had the desired outcome by itself - many smaller investors can be quite "high maintenance", whereas those with more significant portfolios will be happy to leave the platform to manage them in accordance with the principles they bought into when first investing.
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adrianc
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Post by adrianc on Apr 11, 2017 11:41:15 GMT
Sorry, I missed that. You mean you pay tax on the 8% not the post fee 6.5%? so at 40% I net 3.3%! I think you're wrong. Surely you pay tax on the post fee, post bad debt return? So before cash drag and any unplanned bad debt the most I can achieve is 3.3%! Tell me why I would use BM, please. It's a serious question as I currently use zopa+, RS and Fundingsecure, where my post tax returns are quite a bit higher. And I definitely would invest if my pre-tax return was 6.5%, post tax 3.9% But this is the same for every platform, is it not? As BM's tax statement puts it...
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Greenwood2
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Post by Greenwood2 on Apr 11, 2017 12:28:30 GMT
So before cash drag and any unplanned bad debt the most I can achieve is 3.3%! Tell me why I would use BM, please. It's a serious question as I currently use zopa+, RS and Fundingsecure, where my post tax returns are quite a bit higher. And I definitely would invest if my pre-tax return was 6.5%, post tax 3.9% But this is the same for every platform, is it not? As BM's tax statement puts it... No, most platforms structure any fees as a borrower fee or a platform administration fee or such like, not a lender fee. It is not taken from the interest paid to lenders, but before the distribution of interest to lenders, the lenders never have it so there is no tax due on it. BM pay the interest and then deduct the fee from the lenders balance. Edit: My simplistic interpretation! And for clarification.
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arbster
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Post by arbster on Apr 11, 2017 14:31:23 GMT
No, most platforms structure any fees as a borrower fee or a platform administration fee or such like, not a lender fee. It is not taken from the interest paid to lenders, but before the distribution of interest to lenders, the lenders never have it so there is no tax due on it. BM pay the interest and then deduct the fee from the lenders balance. Although FC do quote interest including their fee, but say that HMRC have advised that taxable income is the amount net of their fees. All rather inconsistent and unsatisfactory, really.
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Post by rookyone on Apr 11, 2017 14:32:09 GMT
The new £5k limit would not of affected my account. However, after reviewing the new T&Cs I'm cashing in. When BMs target was 7% and fees 1% they could only get me a sub 2% return in nine months due to cash drag and defaults.
Now the target is 6.5% and the fees 1.5%, it doesn't make sense for me to hang around.
So if BM thinks, it's only smaller investors they will lose, they may be unpleasantly surprised...
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andyc
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Post by andyc on Apr 11, 2017 15:33:47 GMT
However I do not wish to be a customer of a company that thinks it is acceptable to kick out customers that have helped them grow and has given them invaluable feedback,to me that is just ungrateful and insulting to them and I do not see the need to get rid of existing customers. I'm also out for exactly this reason. Ironically, I was perfectly happy with BM, the cash drag and the customer service and was seriously contemplating consolidating my various P2P trial pots into BM. Not now though. Pay more and get less. Not a brilliant proposition and the fact it's parcelled as part of a 'Thank You for your custom' message is just incredibly patronising and irritating. Also in 12 months, BM may suddenly decide £10k or £50k is the sensible minimum. Also, I don't appreciate these doom laden warnings about the dangers of moving funds elsewhere.
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Post by hartshay on Apr 11, 2017 16:37:00 GMT
I am in over 5K and had been contemplating adding more as a fairly simple way of diversifying some parts of my p2p investments. However, a 'target' rate (no guarantees) net of fees of 6.5% is simply not enough for me at this risk level outside of an isa.
A shame as I rather liked the site and the feedback offered ... but head has to rule heart on the one... I think I am going to be out...
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Post by stevefindlay on Apr 11, 2017 17:29:43 GMT
Thank you for all your frank comments in response to the increased minimum balance and fee changes. I just wanted to book-end the day, by thanking the forum members for your candid comments. I can see there is a lot of disappointment, and I am sorry that many clients are disappointed that they may not be able to continue with us, or choose not to. We are seeking to enable our clients to achieve attractive risk-adjusted returns, and felt that the increasing demands on our time to deliver client services to an exceptionally broad customer base was beginning to impact the quality and reach of investments coming across the platform. Perhaps if we were able to access the breadth and quality of lending that fits our criteria within P2P Lending land alone, we wouldn't have had to make these changes. But sadly, all too often, we see a lack of quality or good lending disciplines in a number of areas from platform operators, and this has caused us to cast our net wider to access the quality we are after. As I said earlier, this decision wasn't taken lightly, and was considered to be in the best interests of creating a sustainable and attractive investment proposition for as many clients as possible over the long run. To address a couple of comments above: - Target return: our clients have achieved a gross return (before our fee) in excess of 8.0% p.a. in 2015 , 2016 and 2017 to date. But some clients have achieved less than this (as we've discussed elsewhere). There is a clear correlation between under-performers and smaller accounts, which is one of the drivers to increased account sizes. We will continue to enable clients to target a gross return of 8.0%+ p.a.
- Tax deduction of our fee: there is conflicting guidance on this. FC are clear that this can be deducted. We've heard otherwise elsewhere. We are still awaiting an updated reply from HMRC on this.
- "Ungrateful and insulting": we have not intended to insult anyone - I am sorry for anyone that feels this way. We are grateful for the input received, which has in some ways helped to inform these changes. We respect our client's opinions and will continue to engage with any views that may be expressed.
- "Doom laden warnings": there are some very good P2P lending platforms. There are also some shockers. I wouldn't want any P2P lender (client or otherwise) to lose their funds. I'm not trying to scare anyone - just encourage vigilance and due diligence.
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