Peer-to-peer lending sites: MSE guide discussion

justme111

tony.blunt wrote: »

I invested in Folk to Folk, a P2P lender based in Cornwall, primarily lending to borrowers in the South West. F2F secure your " investment " against property which is fully owned and in the control of the borrower, F2F use a ratio of 60% loan to value of the asset. The property has charges set against it at the land registry and therefore can only be sold with the lenders permission. It was a good investment for us and over a period of 7 years returned 7% without any issues. We chose the "easy in easy out" route and accessed our funds in good time. Returns are down to 6% now but still a good bet, especially with the certainty of funds being accessible in the scenario of a distressed sale of the borrowers asset. Occasionally it is possible to obtain a rate of 8%+ if the loan is required urgently and one has the funds available. S we liked it but their administration paperwork, ie statements and random comm's left a lot to be desired. We exited 18months ago, but still have associates with trouble free investments lodged with them.

Well done for exiting in time. It all works until it does not ..

Alexland

mikb wrote: »

This has happened on other platforms too, where RICS qualified valuations have magically shrunk the moment things went wrong.

One of my friends ran short of money when doing substantial renovations to his property so applied for further borrowing. The lender sent a surveyor who said that because there was currently no kitchen the lender would be unable to advance further money. The surveyor suggested the best way forward was for them both to agree to lie to the lender... Which they did.

Alex

[Deleted User]

Alexland wrote: »

One of my friends ran short of money when doing substantial renovations to his property so applied for further borrowing. The lender sent a surveyor who said that because there was currently no kitchen the lender would be unable to advance further money. The surveyor suggested the best way forward was for them both to agree to lie to the lender... Which they did.

Alex

Jeeez!

No wonder valuations go through checking then... I always thought it was odd when a valuation got pulled back after I'd processed it - but questionable people in any capacity I guess... surveyors, brokers, solicitors!

Alexland

Somerset_La_La_La wrote: »

No wonder valuations go through checking then... I always thought it was odd when a valuation got pulled back after I'd processed it - but questionable people in any capacity I guess... surveyors, brokers, solicitors!

Yeah I guess the surveyor judged that my friend was intent on completing the project (which he did) and figured they wouldn't lend him the money if he couldn't pass the affordability checks. He might have also judged that it was probably in the lender's best interest that the renovation was completed. Still it makes you wonder what assets underpin some of these loans.

Alex

stehouk

Anyone else read the article about the FCA possibly clamping down and lumping p2p in with riskier investment products, seems there are concerns around misleading promotions and headline grabbing returns that never materialise.

masonic

stehouk wrote: »

Anyone else read the article about the FCA possibly clamping down and lumping p2p in with riskier investment products, seems there are concerns around misleading promotions and headline grabbing returns that never materialise.

Yes I did, and it could hardly be a worse situation than the current 'light touch regulation' regime. I'd prefer for the sector to be properly regulated, of course, and carry the same requirements and protections as mainstream investments.

fun4everyone

Sadly I cannot think of a single regulated sector where whatever/whoever it is being "regulated" can't still act like total !!!!!!/rip off consumers/basically flaunt regulations.

masonic

fun4everyone wrote: »

Sadly I cannot think of a single regulated sector where whatever/whoever it is being "regulated" can't still act like total !!!!!!/rip off consumers/basically flaunt regulations.

Indeed, but if your investment broker or fund house or pension provider started helping themselves to your assets held by them you'd have a compensation scheme to fall back on.

itwasntme001

masonic wrote: »

Yes I did, and it could hardly be a worse situation than the current 'light touch regulation' regime. I'd prefer for the sector to be properly regulated, of course, and carry the same requirements and protections as mainstream investments.

If this were to happen the P2P companies should all pay fees to be regulated, be allowed to take part in any investment protection scheme (for fraud, bankruptcy but NOT due to loan defaults in any circumstances).


This is what happens in the banking world, they pay fees and this money is pooled to provide for the case of a bank going bust. Fees should also be paid to cover the cost of staff at the regulators etc. I would not want the taxpayer to pay for anything.


Given this i am not sure how large the fees would be but given there is a lot more risk at P2P lenders then banks (no stringent capital requirements, no internal risk management processes etc), i imagine it will be a lot higher in terms of % of amount to be protected. This will certainly eat into the returns investors will get, potentially to a point where its not worth lending giving all the risks.

fun4everyone

masonic wrote: »

Indeed, but if your investment broker or fund house or pension provider started helping themselves to your assets held by them you'd have a compensation scheme to fall back on.

Yes and the hassle would be worth it for the lols I would get out of the thread on here.

My uninvested cash balance on Collateral is/was approx £50.

My invested balance is/was mid four figures.

My interpretation of FSCS protection for investments would mean that did it exist for p2p platforms (and were Collateral covered by it) my £50 would be safe, but what was invested into loans would be up in the air and not covered. Provided of course it had been invested as described.