Blink and you won't miss it

Agreed. On principle, and in the spirit of the auction-style system, I do not think they should have done this. The slippery slope is (in my view) very steep and very slippy - it's a conflict of interest, particularly because FC know a lot more about Autobid users than everyone else does. This really riles me, their ability to predict the ability to resell (and presumably lack of admin fees) makes me think they are moving more and more towards a target market that is happy with low rates & Autobid (as long as they still beat the bank). If they do intend on reselling these loanparts, then I think that is curtains for me and FC - my book will be sold with no markup and I will say farewell ASAP. I might add, that the 2% cashback combined with the SM Autobid behaviour (and the ability to have loan parts listed at par until sold, without having to manually re-list like the rest of us) makes the situation quite unsavoury. There are all sorts of tricks they could pull that would be very hard to reliably detect, but all give them various advantages over the usual user.


One of the only redeeming features left of the FC platform is that it seems to be filled with lenders who don't know (don't care) about lots of things (including this, which presumably won't be made known to those that don't search), so we can sell our loan parts and move funds out without loss if we're patient. I had someone buy a B-rated loan part at 5.x% (markup +.5%) yesterday...

No. If a loan fails to fill then so be it. Either it was underpriced or the property market has become saturated.

When FC invests in its own loans it risks the safety of the platform. I do not expect FC to have 'skin in the game'. I expect them to provide a marketplace linking borrowers to lenders. A defaulted loan would then be between FC, and those lenders daft enough to invest in it. Now all FC investors could be affected by the risks of a property market downturn.  

I didn't mean to suggest Autobid would be manipulated (more than the ability to automatically have FC parts listed forever until sold) - but before they bought 20GBP loan parts, there is no doubt in my mind that 'they' used information not available to you or I to estimate the ease at which the loan could be resold.

They need Autobid, too - because many of the loanparts on AM will be at a discount to balance the cashback, so no manual AM part-buyer would choose the FC parts over the discounted parts (if they are without discount). Then there is the problem of AM selling fees - they are paying themselves so again gain an advantage in that they could offer parts at a larger discount at no loss than anyone else could.

Either they will rely on Autobid, with data we don't have to predict demand, or they can sell at a big enough discount (without 'additional' loss) which would be a loss for normal sellers who need to consider the AM fees.

My issues are mainly with the AM potential and the unfair position FC has over normal investors. If they keep the loan, then I don't have a problem with that. If they sell the loan to some bigger investors off the platform, then that's also not a problem for me. I only take issue with using the platform to sell parts owned by the platform.

This is what I don't get. FC already has 'skin in the game'; they have pledged to underwrite all tranches except the first of all property loans, and it would be naive to assume that this underwriting would never be required. On that basis, the safety of the platform is already compromised.

I agree with blender that filling this loan was also in the interests of FC and the borrower, but for me that's even more reason to do it; why disadvantage all parties for the sake of a bit of extra underwriting? As you say, this loan failing could affect future business, so, arguably, allowing it to fail risked the safety of the platform more than underwriting the last bit.

I don't think blenders auction analogy applies though. Firstly, chandelier bidding is common, so blender may well have been to an auction where the auctioneer starts bidding on the goods, without warning, because there are not enough bidders to make the reserve (although, granted, the auctioneer will never win). Also, FC was not shilling or attempting to solicit bids from unwilling buyers; everyone who bid was happy with loan details and bid an amount they thought appropriate (or was happy for Autobid to do it for them). If you want an auction house analogy, perhaps it's more like a discretionary reserve, where the auctioneer can deviate from the set parameters to ensure a sale if (s)he judges that it would be in the best interests of all parties.

Anyway, I think we're rapidly approaching the "agree to disagree" stage, but it's nice to have an intelligent debate without anyone calling anyone else "comrade" and/or stomping off!

Yes it may already be compromised by the millions already underwritten, especially if they lose larger lenders. We knew about the proper underwriting on subsequent tranches and it was undesirable but unavoidable - no developer-borrower would accept that uncertainty. Much of the chopping up of loans is for FC's convenience, not the borrower's. I had assumed they would have an agreement with a third party underwriter to take the unsold portions for a fee, and not to buy it themselves and put it back in bits in the SM. Maybe there are proper arrangements for those underwritten tranches, though a third party underwriter might look askance at collecting a contingent funding requirement as a result of FC bidding on the first tranche to make it fly.
But this purchase was not underwriting in any formal sense, was wholly optional, unannounced and in contradiction to what they said in the investor report. Maybe they hoped no-one would notice in the 'all bids' listing. Point is that we do not know what they will do next, and can no longer be trusted.
BTW, not having 'skin in the game' is a basic defining principle of P2P!  No capital or risk in the loan book, take a fee for services provided, no interest for risk. To try to dress up a failure as a desirable thing is disingenuous.
Have to go out pm. (Sighs of relief)

So what's actually for sale in 7423 at the moment?

156 £20 parts.
5 x -1.2%, 1 x -1.0%, 1 x -0.3%, 131 x par, 2 x +0.2%, 1 x +0.3%, 4 x +1.0%, 1 x +0.9%, 2 x +1.0%, 8 x +3.0%

Is it me? Or are there same very odd people out there?

And has anybody noticed this in the Q&A?

I think the bigger concern is FC's underwriting exposure.  Thier primary purpose to provide the platform and not take on loan risk, let alone concentrated exposure to a very cyclical industry.  The last thing I want is the platform whom is administrating my investments going belly up if the housing bubble busts.  The fact the underwriting is being undertaken in another entity provides some comfort, but surely it would have made sense to announce their intended actions well in advance and reassure investors over the protections in place?