Peer-to-peer lending sites: MSE guide discussion

Jsscmm

Regarding collateral, it would seem that the recent news on FCA registers may be worth exploring...

http://p2pindependentforum.com/post/298898/thread

Seems to have details and thoughts.

fun4everyone

Kuflink offering 3% cashback on 3 year or 5 year autoinvest investments (both inside and outside ISA). Runs until the 30th Nov

fun4everyone

Jsscmm wrote: »

Regarding collateral, it would seem that the recent news on FCA registers may be worth exploring...

http://p2pindependentforum.com/post/298898/thread

Seems to have details and thoughts.

Thanks, great stuff from the poster "duck" on that thread.

takesyourchances

fun4everyone wrote: »

Thanks, great stuff from the poster "duck" on that thread.

Excellent stuff from the poster duck just why has the FCA not been held to account about this with Collateral. I never would of touched it with a barge pole if it was not the case

masonic

fun4everyone wrote: »

Yes it really is. A major problem in p2p in my opinion is the conflict of interest (no pun intended) between investor and platform. You would think we could work in harmony but it seems not that easy.

1) It is against the platforms interest to default loans. Platforms advertise their default rates/amount of capital lost in loans and of course want them to be as low as possible to entice new investors in. Current investors can be stuck in some shockingly bad obviously "defaulted" loans which a platform seems very unwilling to formally default. Defaults would mean work chasing and potential loss of capital that also would look bad on their figures. I am thinking about Funding Secure here as an example but it no doubt applies elsewhere.

2) It costs time and money to chase late borrowers effectively. Investors all want lots of time and effort and expertise levelled at getting their money back when a borrower does not pay up. Platform's do not want to spend large amounts of money recruiting experts (they cost) and wasting their time chasing borrowers. I believe a lot of platforms do the minimum they can get away with in this regard.

There is much more. Investors want high quality loans. Platforms just want lots of loans that are filled is another point. The concept of p2p is great but the way it is implemented is kind of shaky. I cannot think of how to solve all these issues.

The other aspect of this is the drive to make new loans and grow the platform without due regard to the quality of the business being taken on. This has two effects, first and foremost it helps the platforms attract equity funding and improves their performance indicators, and secondly it dilutes the previous generation of delinquent loans so that they don't make up such a large percentage of the loanbook. However, it stores up problems for the future in dealing with those loans when they stop performing. Virtually every platform I've encountered seems to be guilty of this to some degree.

What it's refreshing to see is that lenders are getting wise to this and even platforms where lenders seem to pile in on new loans and ask questions later, loans have launched that could not be filled because they just didn't pass the sniff test.

masonic

Jsscmm wrote: »

Regarding collateral, it would seem that the recent news on FCA registers may be worth exploring...

http://p2pindependentforum.com/post/298898/thread

Seems to have details and thoughts.

TBH I was taking a 'wait and see' approach wrt following up the culpability avenue, but I agree with the sentiments that some concerted action among lenders caught up in this could be helpful. I don't for a moment expect anyone to swoop in and put things right for us, but I do worry about the motives for the confidential questionnaire and investigation being conducted by the Flimsy Clueless Authority.

fun4everyone

masonic wrote: »

I do worry about the motives for the confidential questionnaire and investigation being conducted by the Flimsy Clueless Authority.

I declined to reply to it because I thought the same.

Snow_Dog

I agree with the above sentiments regarding the platforms not having a 100% vested interest in defaulting a borrower.


Figure the best method is to choose carefully the platforms that provide loans that are secured on assets that are solid and are not likely to default........


Hmmm, not always the easiest thing to do I guess. But then if you want to return 6-10% you arent looking at sticking your money in HSBC.


P2P is just one aspect of a diversified portfolio, if I can keep returning an average of 7% on P2P I will be happy but im not banking on it.

firestone

Could be me but i don't see why the platform unless dodgy would not be 100% interested in chasing defaults as most are earning their fee from the borrower(or in a very few cases the lender but it still relies on payments) unless the cost of chasing is too high or its better to sell the loan on to a collection company but that is still a business decision.
When a bs or bank reclaims a property it does not have to answer to an investor about how long its taking or what the legal position is etc a property a few doors from me took over a 8 months to be sold after listing and add however long before that it took to get the people out and chasing payments. And we all know how long an IP can take to run down a company but a lot of people in single type P2P loans expect their money back straight away and maybe that's where platforms need to be clearer on the home page about how long the process can take and some sort of time scale

fun4everyone

Having just received my BDO 6 month report, I quote this post from user "hendragon" on the p2p forum

the latest update from BDO seems to say,

1 We haven't figured it out yet

2 You probably won't get all your money back

3 This is our bill

Whole thing is a ****ing scam :eek: