Peer-to-peer lending sites: MSE guide discussion

fun4everyone

agent69 wrote: »

nothing at all in Unbolteds dispute.

You can't state that as a fact seeing as there still has to be a ruling on if they are to be released or not. The borrower has demanded them in court. Precedent says they might well be (Lendy).

masonic

keyboardworrier wrote: »

Lendy has gone into administration. https://lendy.co.uk/
https://www.fca.org.uk/news/statements/lendy-ltd-enters-administration

At least that was one i did see coming. Good luck to all still invested there.

edinburgher

masonic wrote: »

At least that was one i did see coming. Good luck to all still invested there.

At one point I had £££££ invested, but got the willies about their performance and business model. I got out bar £650, so count myself lucky

Nardge

Ongoing anxiety and talk of leaving P2P altogether are recurrent themes throughout the lifetime of this thread!

It needn't be so though...

Collateral never featured, whilst Saving Stream aka Lendy rang alarm bells on '4th Way' long ago. Reviews of Ablrate, Moneything, and Unbolted (frequently mentioned on this thread) have also been very thin, cautious, or hardly flattering. Funding Circle being the most recent to lose their '4th Way' approval.

"But one closure last year to stand out is the failure of Collateral UK. Indeed, this may be a prime example of how not to run a peer-to-peer lending website. Collateral UK went out of business in February 2018 and allegations soon emerged that it didn't even possess the necessary Financial Conduct Authority authorisation. Later, rumours of negligence and even outright fraud emerged. Happily, Collateral UK never passed 4thWay's initial filters and so was never included in our comparison tables."

So Collateral failed even the most elementary 4th Way sniff-test, yet people still invested!

In conclusion I think it's wise to heed what '4th Way' have to say!

---

"What do failed P2P sites have in common?

The one thing they have in common is that they have not been transparent about their records, not open about their operations and unclear in the information they provided. They were secretive or ambiguous. The same applies to all other regulated P2P lending sites that have closed down in the UK.

Notice that the same is also true for the naughty, closed peer-to-peer lending sites that were operating without the required permission from the regulator, such as Collateral UK.

It won't always be this way, because certainly at some point even a few transparent P2P lending sites will close. There's a lot of competition among legitimate platforms that are open with information, so we will see that some will merge or be forced out of business, most likely in phases and cycles. This is the case in any industry, including in banking, the investment fund management industry and the insurance industry – all industries that have similar traits to P2P lending.

But the clear pattern so far demonstrates that we can hugely reduce our chances of lending through a P2P lending site that either closes down or stops doing P2P by ensuring we are getting enough information."

---

"How can you avoid P2P lending sites at high risk of closure? The easiest way -

A very simple way is to go to 4thWay's peer-to-peer lending comparison table or IFISA comparison table and look for a combination of two things:

1. Can you find an entry for the P2P lending site?

Firstly, if the peer-to-peer lending site has no entry in the comparison tables, it means that it has not shared enough information with us since the beginning. It has not provided the 100+ data points our experts require, or submitted itself to our email Q&A sessions and to senior person-to-person interviews. It is therefore safe to assume it has not been open with us at all. This puts it in the category that is more likely to close.

2. What does the Quick Expert Review say about its openness?

Even if it is listed in our comparison tables, you'll need to take a second step, because it might not have provided (or no longer provides) enough information for making what our experts think is a sound judgement of the risks. Again, you can find out if that is the case through the comparison table: look at the reviews under each comparison entry, each of which is written by one of 4thWay's experts. There you will learn what gaps the expert has found in the information provided."

Hope that helps both seasoned and novice investors alike!

With Kind Regards

Fatbritabroad

I dont recall anything particularly negative about ablrate other than the lack of diversity in their borrowers

masonic

Nardge wrote: »

Happily, Collateral UK never passed 4thWay's initial filters and so was never included in our comparison tables."

So Collateral failed even the most elementary 4th Way sniff-test, yet people still invested!

I think that's very disingenuous from 4thWay. Not a peep from them about Collateral while it was trading, then as soon as it collapses they say they had concerns. It is likely they were never looked at because they were too small. At the time 4thWay only covered the bigger platforms.

In conclusion I think it's wise to heed what '4th Way' have to say!

Just looks like paid promotion to me. There's a few well known and reputable names in there, mixed up with quite a number of new start-ups with no discernible knowledge and experience of running a lending business or assessing borrowers. They've even given FundingSecure a rating, which I think somewhat amusing, as I'd guess FS will be the next to pop after Lendy. Also the highest rating being awarded to RateSetter is in need of review now that its rates have plummeted and the provision fund cover is dwindling.

"What do failed P2P sites have in common?

The one thing they have in common is that they have not been transparent about their records, not open about their operations and unclear in the information they provided. They were secretive or ambiguous. The same applies to all other regulated P2P lending sites that have closed down in the UK.
"

And the same also applies to the majority of those still running!

"Firstly, if the peer-to-peer lending site has no entry in the comparison tables, it means that it has not shared enough information with us since the beginning. It has not provided the 100+ data points our experts require, or submitted itself to our email Q&A sessions and to senior person-to-person interviews. It is therefore safe to assume it has not been open with us at all. This puts it in the category that is more likely to close."

No, it just puts it in the category that doesn't want to engage with 4thWay to get on its comparison site. There can be a number of perfectly legitimate reasons for this.

FWIW, I think both Unbolted and Ablrate should be commended for the way they are handling borrowers, defaults and communication to lenders. I stopped lending through Unbolted some time ago due to lower rates, but still use ABL. As Fatbritabroad says, the only issue noted about ABL is the lack of diversity in borrowers.

bowlhead99

masonic wrote: »

I think that's very disingenuous from 4thWay. Not a peep from them about Collateral while it was trading, then as soon as it collapses they say they had concerns. It is likely they were never looked at because they were too small. At the time 4thWay only covered the bigger platforms.

Just looks like paid promotion to me.

No, it just puts it in the category that doesn't want to engage with 4thWay to get on its comparison site. There can be a number of perfectly legitimate reasons for this.

Agreed.

You often find in the world of niche financial services (crypto exchanges, online gambling, binary financial betting, get rich quick schemes etc) there are various sites cropping up branding themselves as independent comparison tools which which pretend to be altruistic, getting their customers the best deal and avoiding the rogue players etc.

Whereas the business model of such a comparison site is to either use their 'reviews' to drive traffic to attract advertising sponsors, or to elicit referral fees and marketing payments from the target businesses as compensation for their work writing or hosting the reviews which drive customers to the targets. Or to get critical mass to be taken seriously when touting for consulting work or advertorial to drive further customers. Which is not really altruistic at all, it's just business.

Nardge wrote: »

Reviews of Ablrate... ...(frequently mentioned on this thread) have also been very thin, cautious, or hardly flattering.

Fatbritabroad wrote: »

I dont recall anything particularly negative about ablrate other than the lack of diversity in their borrowers

When mentioned on this forum over the years (particularly by prolific and competent poster Jamesd) they have generally been seen in a good light, and they don't come in for a particularly bad rap on p2p independent forum.

I can't claim independence myself as a recent participant in their equity crowdfunding round - and as a relatively small private business that investment may all come to nothing (I would have preferred a lower valuation). But I wouldn't have considered an investment at all if all the customer experience reported round the web was universally "thin, cautious, or hardly flattering".

If you make your judgements based on a for-profit comparison site, you are not necessarily going to get the best outcomes. By all means, 4thWay are welcome to keep providing 'consultancy' for banks, FCA and whoever else want some commentary. But when a site is simultaneously trying to pass itself off as a consultancy provider, trustworthy comparison site and risk ratings agency, "shaped by investors and a senior debt specialist", while suggesting that you sign up to "our unique 4thWay Alerts Service, which gives you buy and sell tips", I am guilty of half closing my ears to what they have to say.

They may claim to be "the most cited experts in the major newspapers" but that is a mark of being noisy with deep pockets and a loud marketing department rather than a hallmark of quality and independence.

Nardge

"Reviews of Ablrate, Moneything, and Unbolted (frequently mentioned on this thread) have also been very thin, cautious, or hardly flattering".

It's true that Jamesd and Masonic both spoke about Ablrate and Moneything.
That said, I recall recent nervousness concerning Moneything however.

Ablrate don't appear mentioned by '4th Way' at all ("very thin"),
Moneything are viewed with caution ("cautious"), and
Unbolted haven't been discussed in substance since 2015 ("hardly flattering").

My thoughts aren't solely forged by '4th Way', if anything, I've been largely guided by this thread...
I do note the musings on a couple of other sites too though.

For the record, I've no relation with '4th Way'. I'm very glad they identified four further p2p sites that would make good candidates for my further diversification however (see above). I was also impressed they'd revised their thoughts vis-à-vis Funding Circle with reasonable speed, and by their claim to have never given the green-light or seal-of-approval with Collateral. My gratitude to Masonic for exposing their disingenuousness, else my respect for '4th Way' would have over-escalated! Their inclusion of FundingSecure had also left me puzzled.

Thanking you both - Masonic and Bowlhead 99

With Kind Regards

masonic

A significant borrower at both MoneyThing and FundingSecure has been put in administration today by MT. It's early days yet, but there are some reasons for concern, such as assets that cannot be located, amongst other issues. It seems like MT are persuing all of the appropriate recovery avenues, while FS are playing catch up (the FS loans were trading at a premium earlier today, after the MT loans had been defaulted).

Happy to have only some shrapnel in a couple of the MT loans, having exited others and all of the FS loans a few months ago.

fun4everyone

I escaped from this one also.