Peer-to-peer lending sites: MSE guide discussion

KeepOnKnitting

masonic said:

itwasntme001 said:

No P2P platform should ever get any sort of bailout.  First there will be absolutely no upside for the taxpayer.  Secondly it creates an even bigger moral hazard then there already is following the GFC.

I would be saying the same even if I had money in P2P (although of course i would still want a bailout if it helped me financially).

I still have some money trapped in P2P, and I don't think the taxpayer should be on the hook for any of my capital.

Seconded. I knew there was a risk. I might have lost out. Serves me right.

jennyjj

Ehube said:
RateSetter .... are telling people it will be "at least 6 months" and "probably longer" before money requested released 

...
Effectively, as RateSetter freely admit, money in this market you would like to release and withdraw will still likely be being lent to new borrowers in 6 months and there's nothing you can do about it! Least of all get your money back.

Can I ask where you get that '6 month' quote from? From what I've seen, they seem to be implying a couple of months tops.

I've partly disinvested and continue to try to do so, but I'm not hopeful. I'm particularly p1553d that they will re-contract to lend out my capital out even if I try to ramp up my required interest rate and there seems little I can do about it. I seem to recall that it used to be possible to have all repaid interest and capital go straight to holding, but that's no longer possible.

itm2

Does anyone have any insight into how long withdrawals from Ratesetter Access accounts are currently taking? I requested a drawdown from my Access ISA account on March 20th.

Malthusian

Sailtheworld said:

I really do hope they don't get funding. It's about time those of us who know that higher returns are associated with higher risk aren't asked to bailout those with spare cash who don't.

That ship sails on a regular basis. If enough people believe that an investment is risk-free, the government has to spend everyone else's money to make it so. Barlow Clowes, defined benefit pensions, Equitable Life, IceSave, etc etc. To that list we may be adding LCF and P2P, who knows.

I believe Lendy investors have already been trying to get a public bailout for some time, by arguing that Lendy missold the loans and is therefore liable to them (that liability would then inevitably fall on the FSCS, i.e. the general public).

Why the regulator sat back and allowed this crap to be promoted ad nauseam to ordinary retail investors is beyond me.

itwasntme001

Well the bankers were bailed out in 2008 so why stop there right?  Lets just continue to ignore moral hazard and incentivize reckless behavior in all manner of ways and please lets make sure those who are responsible get away with it along with the money they milked from it.

itwasntme001

Boy am I glad I sold out of P2P a few years back.  I always knew it would be a terrible idea in a downturn and now you have the mother of all downturns!

Malthusian

itwasntme001 said:

Well the bankers were bailed out in 2008 so why stop there right?  Lets just continue to ignore moral hazard and incentivize reckless behavior in all manner of ways and please lets make sure those who are responsible get away with it along with the money they milked from it.

To be fair the logic behind the bank bailouts is slightly different. The logic was that if the banks were not bailed out, everyone would have queued round the block outside every bank to withdraw their money and stuff it under the mattress, and the economy would have collapsed. Furthermore, when the taxpayer bailed out the banks we took shares in the banks in exchange. At one point the taxpayer was making a profit on that deal (although last time I looked a sale of RBS shares at a loss had put us underwater again).

So it was different to bailing out P2P (or Equitable Life or whoever) for two reasons:

1) The bank bailouts were to benefit a wider range of people than those who had their savings in insolvent banks; by contrast only P2P bagholders would benefit from bailing out P2P.

2) The taxpayer could have made a profit by taking shares in the bailed-out banks, and if we didn't we at least mitigated the cost. Most of them had the money, it just wasn't liquid enough to pay everyone if they started queuing round the block, and the credit crunch meant they couldn't borrow liquid funds. A collapsed P2P scheme by contast is virtually worthless (other than a few dribs and drabs from sub-prime borrowers) and there is no prospect of the taxpayer getting any real money back.

Personally I was against the bank bailouts, but I'm just illustrating the logic.

Most people do not put their money in the banks expecting high returns, they have their money in the bank because getting paid in cash and keeping it under the floorboards is not how most people live nowadays. It is socially undesirable to encourage people to put money in risky investment schemes expecting a bailout if it goes wrong, but it is also socially undesirable to encourage people to live cash-in-hand because if you put your money in the bank it might disappear. Moral hazard works both ways.

Ehube

jennyjj said:

Can I ask where you get that '6 month' quote from? From what I've seen, they seem to be implying a couple of months tops.

Sure. When changes were made that enabled you to pay returns from the 30 Day Rolling account (Now Access account) into your holding account to effectively tying you in unless another investor wanted to buy your loan I mentioned it to a few family members / friends. One didn't take much action and is now stuck with money in RS that they thought they could access within a month or so like they anticipated when they first opened the account.

So I phoned RS and simply asked how long the queue is. They wouldn't quote what Reference number for Investment Release they were dealing with but quite openly gave the 6 month figure if you asked to release funds today. Adding that it would be  "probably longer".

Last I spoke to them they were dealing with Release requests from March 12. So they had done 2 days of requests in a week or so. The peak Release of funds request was March 16th (see website) and we are 6 weeks or so on from that. So, for anyone requesting Release of funds today and joining the Release of Investment queue, that 6 month figure is, in my estimation, very optimistic. They are effectively waiting for the Release of Investment queue from March 12 till today to clear before they can have a chance at withdrawing their money. All guesswork but I wouldn't be holding my breath for funds to arrive back in my bank account!!

(Please note this is for the Access product. You can simply divert old 5yr capital repayments  / interest back to Holding Account and then withdraw if you want)

itwasntme001

Malthusian said:

itwasntme001 said:

Well the bankers were bailed out in 2008 so why stop there right?  Lets just continue to ignore moral hazard and incentivize reckless behavior in all manner of ways and please lets make sure those who are responsible get away with it along with the money they milked from it.

To be fair the logic behind the bank bailouts is slightly different. The logic was that if the banks were not bailed out, everyone would have queued round the block outside every bank to withdraw their money and stuff it under the mattress, and the economy would have collapsed. Furthermore, when the taxpayer bailed out the banks we took shares in the banks in exchange. At one point the taxpayer was making a profit on that deal (although last time I looked a sale of RBS shares at a loss had put us underwater again).

So it was different to bailing out P2P (or Equitable Life or whoever) for two reasons:

1) The bank bailouts were to benefit a wider range of people than those who had their savings in insolvent banks; by contrast only P2P bagholders would benefit from bailing out P2P.

2) The taxpayer could have made a profit by taking shares in the bailed-out banks, and if we didn't we at least mitigated the cost. Most of them had the money, it just wasn't liquid enough to pay everyone if they started queuing round the block, and the credit crunch meant they couldn't borrow liquid funds. A collapsed P2P scheme by contast is virtually worthless (other than a few dribs and drabs from sub-prime borrowers) and there is no prospect of the taxpayer getting any real money back.

Personally I was against the bank bailouts, but I'm just illustrating the logic.

Most people do not put their money in the banks expecting high returns, they have their money in the bank because getting paid in cash and keeping it under the floorboards is not how most people live nowadays. It is socially undesirable to encourage people to put money in risky investment schemes expecting a bailout if it goes wrong, but it is also socially undesirable to encourage people to live cash-in-hand because if you put your money in the bank it might disappear. Moral hazard works both ways.

I do not disagree with any of this.  Bank bailouts were, overall, better for us all if you ignore the risks created by moral hazard on a longer term outlook.  Were there any penalties for those who helped caused the crisis?  Apparently not and this in itself creates moral hazard further down the line.  Rinse and repeat.  I guess as a society we have learnt to accept all this.

firestone

Ehube said:

jennyjj said:

Can I ask where you get that '6 month' quote from? From what I've seen, they seem to be implying a couple of months tops.

Sure. When changes were made that enabled you to pay returns from the 30 Day Rolling account (Now Access account) into your holding account to effectively tying you in unless another investor wanted to buy your loan I mentioned it to a few family members / friends. One didn't take much action and is now stuck with money in RS that they thought they could access within a month or so like they anticipated when they first opened the account.

So I phoned RS and simply asked how long the queue is. They wouldn't quote what Reference number for Investment Release they were dealing with but quite openly gave the 6 month figure if you asked to release funds today. Adding that it would be  "probably longer".

Last I spoke to them they were dealing with Release requests from March 12. So they had done 2 days of requests in a week or so. The peak Release of funds request was March 16th (see website) and we are 6 weeks or so on from that. So, for anyone requesting Release of funds today and joining the Release of Investment queue, that 6 month figure is, in my estimation, very optimistic. They are effectively waiting for the Release of Investment queue from March 12 till today to clear before they can have a chance at withdrawing their money. All guesswork but I wouldn't be holding my breath for funds to arrive back in my bank account!!

(Please note this is for the Access product. You can simply divert old 5yr capital repayments  / interest back to Holding Account and then withdraw if you want)

Been mentioned before but for anybody new you can get round the problem of Access and the other new products auto lending your repayments so its the same as the 5yr/1yr mentioned in your last line
Set your rate in Access etc very high so when you get a repayment it will not lend at that point cancel the lend order and it goes back to your holding account and you can withdraw to bank.
You can still do this at the same time as a RYI request and while may only be small amounts (or if your very,very,very lucky an early repayment!) at least its moving some money in your direction and your using Two methods to withdraw not One
Also always worth setting the rate high in 1yr/5yr just in case your instructions paying to holding go wrong