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Fig Lee
Posted: 24 May 2020 13:06:01(UTC)
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Hi all,

I hope that you are enjoying a well deserved weekend.

The purpose of this thread is to act as a placeholder for all P2P news and developments. I assume that there is no such thread that acts as a static or "pinned" discussion in a similar way to the Transactions thread.

I have several P2P accounts and are aware that many of you do too.

So, my first contribution to this thread is as follows...

Recently, several P2P providers have taken action in response to the recent crisis. Funding Circle the worst in my opinion. They have:

- Stopped selling loan parts
- Started to sell government loans to small business
- Excluded current customers from those arrangements
- Prohibited withdrawals other than loan repayments

So in short, although apparently a short term measure they have broken the code for me and I for one will be pulling all my funds out.

And I bet they have done an absolute good job in alienating most of their other customers to make a short term gain for themselves.

With such a development in mind it would be interesting to hear your thoughts about this and any other P2P industry news and it will be good to keep in touch.

Best

Fig
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Mikki on 20/06/2020(UTC)
SimonHughes
Posted: 24 May 2020 13:11:39(UTC)
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Fig Lee;116605 wrote:

.....................................

And I bet they have done an absolute good job in alienating most of their other customers to make a short term gain for themselves.



Perhaps they are taking these measures not to make a short term gain but to prevent a permanent closure which would be worse for everyone.

I exited P2P about 18 months ago and am glad I did so.
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ANDREW FOSTER on 24/05/2020(UTC), Mikki on 20/06/2020(UTC)
low income investor
Posted: 24 May 2020 13:46:41(UTC)
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l got out of p2p between 2015 -2019 when it was starting to become clear that the platforms would have to start dumping on their retail investors in order to make their models work.
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1 user thanked low income investor for this post.
ANDREW FOSTER on 24/05/2020(UTC)
DIY Investing
Posted: 24 May 2020 14:14:06(UTC)
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Joined: 29/09/2018(UTC)
Posts: 3,828
Funding Circle were lending out my money as if it were government money before this crisis - to anyone and everyone with seemingly no due diligence and little expectation of repayment. I eventually managed to sell my loans after months of waiting.

Its a shame they are such a shoddy company because I like the idea of the P2B business model. Facilitating the lending of money to businesses for a fair return feels like what banking should be about.

I think they started off on the right foot but either they didn’t have the resources to identify enough good businesses quickly enough to keep up with the inflows of investors’ money, or they simply got lazy and started taking their customers for granted. Maybe a bit of both.

As for P2P lending, no thanks. Consumer debt isn’t for me. I’m not comfortable lending money to people to buy things I would never in a million years borrow money for, especially at those interest rates. I don’t want to lend to irresponsible borrowers.
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what me worry?
Posted: 24 May 2020 15:32:59(UTC)
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I hold ratesetter and zopa accounts and have done for a number of years. Zopa have tightened up on who they lend to and have put in ever stricter criteria. (Tick). Ratesetter have halved interest rates paid to lenders so that they have a fund to pay on non collectable debts. I Need to investigate more on what that means and if I have the correct understanding, but if it means what I think then I am not very happy. Will report back in due course

People have always bought what they could not/ cannot afford thats a fact. I am of the generation that remembers the days of the " catalogues" and the " its only so much weekly" attitude (even then it scared me how much people didnt understand interest rates/money). The cost of using that system was astronomical but people still used it as it was "only X a week" .

With regard to P2P generally, I would prefer to see that being facilitated in the mainstream and regulated along with provi and credit unions.

The only alternative for many is the loan shark and that is by the worst of all worlds by a long long way. Now that really does need to be stamped out.
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3 users thanked what me worry? for this post.
Mr Helpful on 24/05/2020(UTC), Fig Lee on 24/05/2020(UTC), Mikki on 20/06/2020(UTC)
King Lodos
Posted: 24 May 2020 16:33:29(UTC)
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Credit drives the economy and P2P's probably a sign of how all lending will be done in the future.

Funding Circle was great early on – when you could match your own loans .. I only used the automatic feature (never researched individual businesses), but used to average (I think) 10-20% yields?

It was basically inefficient – so you could get these junk yields on loans of B-C credit ratings.

As soon as they stopped that, I started drawing down .. Zopa made it through the Financial Crisis, but when they withdrew the provision fund, I got my money out.

I've had RateSetter paying all returned capital into my bank for a while .. But it's been a fine platform .. Again, you used to be able to make a lot more when you could match your own loans .. My average in there was 6% for a long time – now 5.5%-ish .. But as rates fell, and risk grew, it became less attractive .. I still think they've got the only decent setup
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Fig Lee on 24/05/2020(UTC), Mikki on 20/06/2020(UTC)
Fig Lee
Posted: 24 May 2020 17:08:52(UTC)
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what me, worry?;116621 wrote:
I hold ratesetter and zopa accounts and have done for a number of years. Zopa have tightened up on who they lend to and have put in ever stricter criteria. (Tick). Ratesetter have halved interest rates paid to lenders so that they have a fund to pay on non collectable debts. I Need to investigate more on what that means and if I have the correct understanding, but if it means what I think then I am not very happy. Will report back in due course

People have always bought what they could not/ cannot afford thats a fact. I am of the generation that remembers the days of the " catalogues" and the " its only so much weekly" attitude (even then it scared me how much people didnt understand interest rates/money). The cost of using that system was astronomical but people still used it as it was "only X a week" .

With regard to P2P generally, I would prefer to see that being facilitated in the mainstream and regulated along with provi and credit unions.

The only alternative for many is the loan shark and that is by the worst of all worlds by a long long way. Now that really does need to be stamped out.


Yes, I do like Zopa and have been with them since the 2008 crisis.

I think that like gambling casino's some P2P have better risk management systems than banks.

And yes, this week they have frozen loan repayments for a period. They are not stupid and know that it would be a worse outcome for all if people actually fold for good. I can go with that notion but I wonder how many borrowers are actually as poor as they make out.
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Fig Lee
Posted: 24 May 2020 17:14:58(UTC)
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Joined: 23/12/2019(UTC)
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And apparently it was reported over the weekend that the FCA have been in touch with all regulated payments firms (not specifically P2P).

They are concerned that the new fintech start ups such as Monzo could have operational liquidity management issues as millennial's withdraw funds.

Who knows

https://www.finextra.com...-rushes-out-new-guidance
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Mikki on 20/06/2020(UTC)
D Bergman
Posted: 24 May 2020 17:18:14(UTC)
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Similar to KL, I tried Zopa, Funding Circle & RateSetter early on.

I found FC difficuolt to deal with and their systems seemed to become more opaque and so I got out, not sure if I made any profit or not. I wouldn't touch them with the proverbial barge pole.

I used Zopa longer but eventually withdrew all my money when the potential losses were starting to overtake the profits.

I stuck with RateSetter and found them much better than the other two. Their provision fund has covered (up to now) all losses, and my average interest rate has been 5.6% over the past 8 years.
I have about 10% of my portfolio with them now.

They're now working on the assumption that Covid-19 means that the provision fund, as it stands, will not be sufficient to cover expected bad debts so are reducing the interest paid to investors by 50% till end of 2020, to increase the fund and reduce the likelihood of investors suffering capital losses.

Obviously there is a risk that the bad debts will rise faster than the fund, but from what I can figure their action will protect all capital losses and probably interest losses as well.

RateSetter has also learned from their own past mistakes and are communicating their policies clearly.
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3 users thanked D Bergman for this post.
Fig Lee on 24/05/2020(UTC), King Lodos on 24/05/2020(UTC), Dan L on 26/05/2020(UTC)
Ramondo
Posted: 24 May 2020 17:29:10(UTC)
#11

Joined: 20/10/2018(UTC)
Posts: 701
I have money in Zopa and Ratesetter, as above returns I have noticed returns diminishing.
I have started to withdraw money when ever possible from Ratesetter and will start doing the same with Zopa soon.

I'm not at all sure that the financial future in most area's is going to be that rewarding, so intend to amend a proportion of investments into cash or what ever savings/N.S.I etc.

I intend to wait and watch for a while, I don't need to make large profits and have not got time on my side for a long recovery cycle in the event of a big market drop down again.
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