Peer-to-peer lending sites: MSE guide discussion

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

masonic

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.

It has always been the case that getting your money out of these accounts was subject to sufficient liquidity. The change that was introduced was a change to the default maturity option, such that funds are automatically rolled over. Had this crisis happened prior to the T&C change, investors would still see their money stuck in these accounts as the money was lent out with repayment terms that exceeded the term of the investment product.

firestone said:

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.

Preventing the money being lent out again using this trick is a good way to slowly reclaim your capital, but as borrowers will have loans with terms up to 5 years, it could take that long for all of your money to be returned. I know you know this and have alluded to it above, but it's worth spelling out as I've seen some people come away with the expectation that this trick will see them get all their money out within a month.

firestone

Good point and i certainly don't want anyone thinking in month/s!! 

drphila

itm2 said:

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.

More info here:

https://p2pindependentforum.com/post/385501

but I think you should expect 3-6 months

mikehero

Nardge said:

mikehero said:

For the last three tax years, the amount of my loans that were written off as bad debt was £40, £899 and now £2412.  The amount of interest I received in each of the three years was approximately constant at £5000.  So the bad debts written off in this last tax year was nearly 50% of the interest received.  I did complain to Zopa last year, but they just said "that's the way it works".

I'm not sure what the complaint was for. There will be bad debts, though the interest you received appears to have done much more than compensate the loss...

Of course there will be bad debts.
I was pointing out that the Zopa bad debt write-offs have been escalating over the last three years even before covid-19.
Anyone with any experience of P2P will know that when you make an agreed loan at say 6% interest, you don't expect to lose capital equal to half the expected interest.

I'm astounded that you say "the interest you received appears to have done much more than compensate the loss".  That's not the way that P2P lending is supposed to work.

mikehero

Albermarle said:

I did complain to Zopa last year, but they just said "that's the way it works".

Interest minus bad debts plus any recoveries = return 

That's how p2P works so not sure what else you expected Zopa to say ?

Maybe I expected an explanation from Zopa, of why the bad debt write-offs were getting so big.
Obviously you've also missed the point.
You say "Interest minus bad debts plus any recoveries = return".
Yes, I agree with this very sound algorithm of yours.
However, the whole point of my original post was to point out that Zopa had bad debt problems before covid19.

I'm sorry that neither your comment or Narge's comment were of any value to this particular discussion.

granta

Does anyone have any insight into how long it's taking to withdraw funds from Loanpad please?

Nardge

granta said:

Does anyone have any insight into how long it's taking to withdraw funds from Loanpad please?

It's the same as for most P2P platforms, withdrawals have been frozen for the time being. That said, Loanpad are felt to be amongst the more secure of the platforms, have the lowest LTVs, and they know what they're doing (stated both in reviews and from personal experience and interactions with them).

With Kind Regards