Peer-to-peer lending sites: MSE guide discussion

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  • justme111
    justme111 Posts: 3,508
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    dekkard wrote: »
    Funding Circle currently have just 6 loan requests showing.

    I'm new to this. Is that number not very small ?!

    It works. Tomorrow there may be another 6 requests and so on. There are thousands of loan parts for sale on secondary market at any given time as well. Quantity of borrowers is not the issue.
    The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
    Often people seem to use this word mistakenly where "quandary" would fit better.
  • I think I will be avoiding FC! I've seen some worrying things about them on the P2P forum.

    http://p2pindependentforum.com/thread/8920/expansion-growth-loan-18602-defaulted

    I understand that losses through P2P are to be expected but I would expect the platform to be more careful.
  • elephantrosie
    elephantrosie Posts: 467 Forumite
    why would loans be at highest risk when approaching their maturity date?
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  • elephantrosie
    elephantrosie Posts: 467 Forumite
    FS and FC have high defaults.
    Another night of thankfulness.
  • bowlhead99
    bowlhead99 Posts: 12,295
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    why would loans be at highest risk when approaching their maturity date?

    At the beginning of a loan you have just given the borrower a lot of cash so he's probably not going to have a problem making his first interest payment. And he might continue to make payments (or perhaps, the platform's bad debt fund might cover them).

    But when you get to the end of the term, and all of the amounts have become due - and every last penny is supposed to have been paid by the borrower - that's when you find out if he could afford to pay you the whole amount, or if not, how much he was short.
    FS and FC have high defaults.

    Needs some context. Compared to what places that specialise in secured lending or business lending or unsecured consumer lending get? Compared to what banks get? Compared to what wonga or payday loans places get? Compared to what other P2P platforms with exactly the same quality of loans get?
  • charoniv
    charoniv Posts: 90 Forumite
    Compared to their prediction maybe?
  • jamesd
    jamesd Posts: 26,103
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    I think I will be avoiding FC! I've seen some worrying things about them on the P2P forum.

    http://p2pindependentforum.com/thread/8920/expansion-growth-loan-18602-defaulted

    I understand that losses through P2P are to be expected but I would expect the platform to be more careful.
    The discussion correctly indicates what should be done. The loan description is a financial promotion by the P2P platform, which is responsible for ensuring that the description is fair, clear and not misleading. A false claim about security or guarantor assets or a guarantor without the assets to actually pay based on public records that can easily be checked doesn't comply.

    The first recourse is a formal complaint and request for redress in the form of payment of the amount that would have been recovered if the security had been accurately described. If the firm declines a complaint to the Financial Ombudsman Service is the next step. If the FOS orders the firm to pay they must or you can ask a court to let you enforce the FOS ruling, including by sending in bailiffs. If the P2P firm is unable to pay it may end up facing a winding up petition to shut down the firm and take its assets to pay its debts. If there is still a shortfall the FSCS does not provide protection for P2P and the remaining unpaid money is lost.

    The FOS can be contacted and asked to take a look before complaining to the firm and it can be useful in cases like this one where the result seems clear and it could avoid lots of individual complaints.

    Preserving all evidence about the original loan description then asking the FOS to take a look is the way to go, I think. Mentioning regular partial payments as an option instead of winding up the firm if it can't pay would also be sensible if it's trading profitably otherwise.
  • Malthusian
    Malthusian Posts: 10,898
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    This reinforces that "secured lending" where no-one is doing basic due diligence to check that the security actually exists should be considered and treated as unsecured lending. Why should the FOS be involved? Clearly all the punters who invested in this loan should have "done their research".

    If you're going to invest in corporate lending without employing a due diligence team to do the most basic checks then this is going to happen. I was under the impression that everyone who invested in corporate loans knocked a couple of percent off their expected return to allow for this. Maybe the FOS will give you your money back, but be careful what you wish for. If you start putting in expensive complaints to the P2P platforms then they might actually decide they have no option but to start hiring professionals to do due diligence, and you aren't going to see those 10-12% headline rates any more.
  • londonlydia
    londonlydia Posts: 428
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    Hi - Question on IFISA P2P reivestments!

    I have a current IFISA with Crowd2Fund that I started this tax year. I have started to get repayments back now. Am i right in thinking that if I reinvest those returns, that those sums have to be added to the ISA allowance total? Even though it is 'recycled' money within the same tax year?
  • Froggitt
    Froggitt Posts: 5,904 Forumite
    If it works on the same rules as other ISAs, opt to have the repayments automatically reinvested by them, rather than paid out and reinvested.
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