c88dnf
Member of DD Central
Posts: 364 
Likes: 266
|
Post by c88dnf on May 25, 2017 11:54:45 GMT
Zopa have announced this morning (May 25 2017) that the Access and Classic accounts will be withdrawn from December 1st, 2017. Along with them will go Safeguard coverage. Existing loans covered by Safeguard will be protected until Dec 1st 2022.
Zopa's blog states:
The (Safeguard) fund was designed to ensure that investors only paid taxes on the net income they received from Zopa borrowers. In 2015 the tax laws were updated: enabling investors to claim for relief on losses from bad debt. As a result, the primary reason for Safeguard was removed, and we have taken the decision to retire the fund.
For the record, I am not a current investor in Zopa and haven't been since it became impossible to know at what rate your money might earn interest. I do hold a rump of defaulted loans from pre-Safeguard days which are slowly disappearing from the loans list as they become unrecoverable. All the dross was originally rated by Zopa as A+ or A grade.
It seems to me that lending with Zopa from December will mean lending money for an unknown purpose at an unknown rate of return, with no knowledge of the risk level involved and no protection should Zopa's risk analysis be incorrect. Or am I missing something?
|
|
dandy
Posts: 427
Likes: 341
|
Post by dandy on May 25, 2017 12:01:32 GMT
Zopa have announce this morning (May 25 2017) that the Access and Classic accounts will be withdrawn from December 1st, 2017. Along with them will go Safeguard coverage. Existing loans covered by Safeguard will be protected until Dec 1st 2022. Zopa's blog states: The (Safeguard) fund was designed to ensure that investors only paid taxes on the net income they received from Zopa borrowers. In 2015 the tax laws were updated: enabling investors to claim for relief on losses from bad debt. As a result, the primary reason for Safeguard was removed, and we have taken the decision to retire the fund.For the record, I am not a current investor in Zopa and haven't been since it became impossible to know at what rate your money might earn interest. I do hold a rump of defaulted loans from pre-Safeguard days which are slowly disappearing from the loans list as they become unrecoverable. All the dross was originally rated by Zopa as A+ or A grade. It seems to be that lending with Zopa will from December mean lending money for an unknown purpose at an unknown rate of return, with no knowledge of the risk level involved and no protection should Zopa's risk analysis be incorrect. Or am I missing something? Rates: 3.9% or 6.1% Risk: A-C or A-E Purpose: Personal loans for cars, home improvements, or any other use
|
|
|
|
Post by gidoppp01 on May 25, 2017 12:20:31 GMT
So, effectively, Zopa becomes Zopa PLUS. Unless they tweak the platform model similar to other platforms, the plus might scare off most of the low risk investors.
|
|
ashtondav
Member of DD Central
Posts: 1,814
Likes: 1,092
|
Post by ashtondav on May 25, 2017 12:30:24 GMT
I'd missed 3.9% with no safeguard. If that's the case the cautious ought to head for RS where you can get 3.9% on the five year market with a provision fund. I can't see why anyone would choose the ZOPA cautious option of 3.9% with no provision fund.
and what about the free cash out option in access? does that disappear too. If so will cash out be 1% for both accounts, plus any interest rate penalty? If so my rainy day money will migrate to RS, as well. Z+ is the only account of interest to me, but that's partly because as an early adopter I get no fee so am achieving 7.5% in Z+
|
|
|
|
Post by portlandbill on May 25, 2017 13:15:08 GMT
having decided that missed repayments were becoming too much of an issue with my + loans, there really seems no reason to continue with Zopa at all, now that safeguard is being removed.. I can get better rates with similar risks elsewhere. I shall now have repayments paid into my holding account and withdraw as and when.
|
|
|
|
Post by yorkman on May 25, 2017 13:46:23 GMT
"The fund was designed to ensure that investors only paid taxes on the net income they received from Zopa borrowers. In 2015 the tax laws were updated: enabling investors to claim for relief on losses from bad debt. As a result, the primary reason for Safeguard was removed, and we have taken the decision to retire the fund."
Silly me, I thought that the Safeguard was to mitigate against defaults and nothing to do with tax. I'm out of here!
|
|
|
|
Post by BrianC on May 25, 2017 14:28:18 GMT
Big mistake by Zopa. Plus is not even old enough to decide if it's a success or not with many posts on here showing how variable defaults can be. Core will be no different. The only thing not mentioned above is that Core targeted return is 3.9% and not the headline rate. I'm guessing the headline rate for core will be 5% or maybe even 6 with an aim of achieving 3.9%. That makes the figures look more appealing but as other have said many people just want to know what rate they're getting rather than having to count defaults each month. Zopa are introducing new analysis tools to show investors actual performance which may help a little.
Still a huge backwards step tho IMHO. AC and R are better platforms now.
I guess the big question will be, will enough investors prefer to earn 6% with risks meaning they'll actually get between 3 and 6% or a guaranteed 4%. Are we all gamblers?
|
|
|
|
Post by gidoppp01 on May 25, 2017 14:39:41 GMT
I'd missed 3.9% with no safeguard. If that's the case the cautious ought to head for RS where you can get 3.9% on the five year market with a provision fund. I can't see why anyone would choose the ZOPA cautious option of 3.9% with no provision fund. and what about the free cash out option in access? does that disappear too. If so will cash out be 1% for both accounts, plus any interest rate penalty? If so my rainy day money will migrate to RS, as well. Z+ is the only account of interest to me, but that's partly because as an early adopter I get no fee so am achieving 7.5% in Z+ The chance to get 3.9% on 5 year income with RateSetter is very slim at the moment. Last loan matched @ 3.5%!
|
|
|
|
Post by gidoppp01 on May 25, 2017 14:44:29 GMT
Big mistake by Zopa. Plus is not even old enough to decide if it's a success or not with many posts on here showing how variable defaults can be. Core will be no different. The only thing not mentioned above is that Core targeted return is 3.9% and not the headline rate. I'm guessing the headline rate for core will be 5% or maybe even 6 with an aim of achieving 3.9%. That makes the figures look more appealing but as other have said many people just want to know what rate they're getting rather than having to count defaults each month. Zopa are introducing new analysis tools to show investors actual performance which may help a little. Still a huge backwards step tho IMHO. AC and R are better platforms now. I guess the big question will be, will enough investors prefer to earn 6% with risks meaning they'll actually get between 3 and 6% or a guaranteed 4%. Are we all gamblers? I am trying to maximise zopa plus @ 9%, but only time will tell. The only thing I like zopa plus is the rate they are lending. However, if Funding circle is doing 60 loans everyday like today, I will switch back to FC.
|
|
Greenwood2
Member of DD Central
Posts: 4,384
Likes: 2,784
|
Post by Greenwood2 on May 25, 2017 14:55:08 GMT
Seems like a bad time to do this while Zopa Plus doesn't seem to be delivering the target rate. The newer lenders who are used to having their loans protected (on various platforms) will not like seeing defaults mount up, I wouldn't like to be answering calls on the customer help line!
Edit: I wonder if this means the safeguard fund is getting hammered.
|
|
|
|
Post by yorkman on May 25, 2017 20:05:20 GMT
Where is the incentive for Zopa to lend cautiously now? Seems that we will bear ALL the risk but have no control over where our money is going.
|
|
|
|
Post by GSV3MIaC on May 25, 2017 20:56:07 GMT
.. or at what rate.
... but then, they are applying to become a bank, iirc.
|
|
ashe
Posts: 53
Likes: 36
|
Post by ashe on May 25, 2017 21:46:27 GMT
|
|
happy
Member of DD Central
Posts: 397
Likes: 497
|
Post by happy on May 26, 2017 6:18:19 GMT
I will be interesting to see which way this pushes RS. They could either, A/. Make a big fanfair about their (now almost unique in their marketplace) Provision Fund, or B/. Abandon it with a very very large sigh of management relief. Based on their current lack of need to encorage any new lenders I would put my money on B.
So where does that leave the P2P plan.....
FC - exiting due to switch to low fixed rate SME and property loans now gone
Zopa - exiting due to low rates on classic, don't trust returns on Plus and now Safeguard kicked into touch
RS - exiting due to low rates and declining confidence in PFs ability to survive effect of move to potentially higher risk (in downward economic cycle) SME lending
Wellesley - Out due to low renewal rates and concerns over recent lack of loan origination
So basically this only leaves a handful of credible perceived lower risk non-SME/property develpoment/bridge platforms like LendingWorks and Landbay but here rates are dropping as well. The only other option is to go swimming with the 12% sharks......
|
|
|
|
Post by gidoppp01 on May 26, 2017 6:32:32 GMT
I think removing Safeguard is going to be a big challenge for Zopa. Because many investors likes the Zopa because of the low risks.
Before the Zopa Classics, there were pre-safeguard loans, at least investors can set their own rates and choose the appropriate risk level. I was doing A+ and A at that time.
|
|
