Peer-to-peer lending sites: MSE guide discussion

jamesd

Try to resist a temptation to sell out of all P2P, particularly at platforms where you can reduce the price to sell more quickly. Thursday and the next few weeks may see unusually low selling prices and some patience can save you a lot of money.

The biggest issue after that is likely to be loss of liquidity, with no secondary market and loans being held to term. Fortunately most have remaining terms well under a year so the money should be returned fairly quickly.

In spite of the regulatory problem it appears that proper transfer plans and client money segregation are largely in place, so for at least most of the money it's not on the company books and subject to the unsecured creditor rankings. In most cases this is inherent to P2P because the loan contracts are directly between borrower and lender, with the platform doing administration for a fee. The company handling the administration which sent the email is the one that Collateral UK had made longstanding handover arrangements with and this seems to be working reasonably at the moment.

You may be familiar with two related companies from the terms and conditions and I've linked to their Companies House entrries.

2.3. Collateral Security Trustee Limited is a company incorporated in England and Wales with company number 10390795 whose registered office is at 12th Floor, Blue Tower, Media City UK, Manchester, M50 2ST (Collateral Security Trustee). Collateral Security Trustee acts as security trustee on behalf of Lenders in relation to any Security held in respect of each Loan and will also enforce any security on behalf of Lenders under instruction from the Lenders or Collateral Agent (where Collateral Agent has been so instructed by Lenders).

Companies House has this update for the security trustee, perhaps an indication of when part of the transition was happening: "Appointment of Mr Andrew Currie as a director on 14 February 2018". This is the firm that has the legal charges (sometimes mortgages) that are recorded on borrower assets at Companies House and the Land Registry.

2.4 Collateral Agent Limited is a company incorporated in England and Wales with company number 10390316 whose registered office is at 12th Floor, Blue Tower, Media City UK, Manchester, M50 2ST (Collateral Agent). Collateral Agent acts as agent on behalf of Lenders in relation to Loans.

Don't expect the latest information at Companies House, delays of weeks are normal.

It's inevitable that there will be worrying posts from those who don't like P2P, don't understand the protections that come from the segregation between platform and lender assets or are simply understandably worried about their own money. Try not to let it get to you.

Personally I have about £35k lent via them. Because I expected to need the money before the end of the tax year it's mostly in loans that were expected to repay soon and I also had most for sale on the secondary market.

fun4everyone

jamesd wrote: »

Personally I have about £35k lent via them. Because I expected to need the money before the end of the tax year it's mostly in loans that were expected to repay soon and I also had most for sale on the secondary market.

Congrats on keeping your cool over recent days and not posting when frankly I was getting severely hacked off at collateral with a lot less at risk.

Hope the administration of repaid loans is handled in a timely manner. I am grateful this appears to be a best case scenario but it could be quite a while for the loans i’m in.

There appears to be a group forming at the p2p forum who will nominate one representative to put everyone’s questions forward to the administrator. Priorities for me would be

1) What is the status of cash on accounts (underhand slipped in t and cs made that unsegregated)

2) What is the status of money in unfilled loans

3) I hope to get access again to the website in some form so I can check exactly what’s what on my account.

Fatbritabroad

takesyourchances wrote: »

I will throw my hands up to this too, think fair to say from most, otherwise our cash be parked in the post office :rotfl:



Yes that is completely true as well, when you get the interest payments and repayments and all is working, it does get very addictive. I admit I have a bit of an addictive personality.

I am sure we have all suffered a default etc, but a platform going down is another new experience we have crossed!

Just to say I meant no offence and still feel very sorry for your loss. It'd be very easy to do with the returns on offer. There by the grace of God and all that

jamesd

fun4everyone wrote: »

There appears to be a group forming at the p2p forum who will nominate one representative to put everyone’s questions forward to the administrator. Priorities for me would be

1) What is the status of cash on accounts (underhand slipped in t and cs made that unsegregated)

2) What is the status of money in unfilled loans

3) I hope to get access again to the website in some form so I can check exactly what’s what on my account.

Mine are a bit different:

1. Please confirm that you or the relevant loan servicing company have access to all records of which lender has lent how much to each borrower and account balances and have arranged to pay for ongoing service from web hosting sites and employees to preserve this. Few lenders and no borrowers will have these records and you'll need this to return the money to the correct people.

2. What are the statuses of Collateral Agent Limited and Collateral Security Trustee Limited? Are they believed presently to be solvent and able to carry out their responsibilities.

3. Some loans were expected to repay around the end of February. Did any repay and what heavily caveated rough estimate do you have of when a distribution from these, cash balances and money offered by lenders but not yet advanced to borrowers might be anticipated?

4. Do you have a priority payment scheme to help anyone who might have urgent financial difficulties obtain some money more rapidly?

fun4everyone

Number 3 in particular seems pertinent to me there.

I also wonder with some of the loans out there.....these have gone to borrowers who expected to renew over and over. How are these administrators going to handle that? Are they going to demand repayment in full at term with no possibility of renewal? They could just go to other p2p sites to refinance maybe.

takesyourchances

Hi James, good to read your views on the situation with Collateral and lets hope all continues with seeing most of our funds returned. You still have a large sum with Collateral and hope you get all / most of this back too.

I won't be selling out of Ablrate and have most of my property development loans for sale on MT, I just don't like these types of loans and it has been my gut feeling for a while for the massive problems that can arise half way through a build etc and want to reduce these types of holdings.

I sold ratesetter as rate was too low, with repayments etc it dropped to 4.9% overall and just £1500 left. I won't make any knee jerk reactions with Ablrate due to this.

Will pick this topic up later, need to see this snow situation here

Great to have your thoughts on it all.

Fatbritabroad

Ablrate have just sent a mass email detailing their procedures which I thought was very good. Looks like I wasn't the only one contacting suggesting they comment. This may actually be good for sites that have full fca authorisation. And to think I was only concentrating on the sites with us as to save tax

takesyourchances

Fatbritabroad wrote: »

Ablrate have just sent a mass email detailing their procedures which I thought was very good. Looks like I wasn't the only one contacting suggesting they comment. This may actually be good for sites that have full fca authorisation. And to think I was only concentrating on the sites with us as to save tax

Just read it and I think this is very good for Ablrate to send I think investors will look for full FCA now after this being more alert to the fact.

economic

takesyourchances wrote: »

Just read it and I think this is very good for Ablrate to send I think investors will look for full FCA now after this being more alert to the fact.

But Col were FCA authorized up until i think end of jan. What if others lose FCA authorization status suddenly? what then?

economic

jamesd wrote: »

It's inevitable that there will be worrying posts from those who don't like P2P, don't understand the protections that come from the segregation between platform and lender assets or are simply understandably worried about their own money. Try not to let it get to you.

Personally I have about £35k lent via them. Because I expected to need the money before the end of the tax year it's mostly in loans that were expected to repay soon and I also had most for sale on the secondary market.

I agree that investors will over worry about contagion etc. However there is a genuine worry about Col of course given that the money will take some time to retrieve and that there will be a lot of uncertainty as investors can not even login to see updates etc.

Its also a worry that Col were FCA authorized up until end of Jan. There is nothing to suggest this wont happen to any of the other platforms. A genuine concern by investors.

I have been saying for a few weeks now that the risks are no worth the return for me given the current stage in the economic cycle. Not only do you have to take on 1st order risks related to the loan itself which can and will get worse as the economy deteriorates but you also have issues related to the platform as recently evidenced by Col. Nothing to suggest it could not happen to any of the others and whilst this does not necessarily mean capital losses, there would be a LOT of uncertainty and misinformation and lack of information. Are the returns (which for me has averaged around 5-6%) worth it for all these risks not to mention your time assessing the investments, monitoring any bad debt, monitoring and perhaps chasing failed platforms, general worry about liquidity etc etc.