Peer-to-peer lending sites: MSE guide discussion

jamesd

Sea_Shell said:

How's the P2P landscape looking these days in our post-Covid* world?

I've just read the last 5 pages of this thread and it was all looking a bit shaky there for a while.

Should be gradually improving.

Most of my likely losses have been due to platform misconduct of some sort:

1. Collateral appears to have been long firm fraud

2. Moneything didn't have sufficient funds set aside for administration and my biggest likely loss there is for a loan where they failed to disclose that the client had a long record of loan defaults, including defaulting on earlier tranches of loans made by MoneyThing. No way I'd have been in that loan if I'd known the truth.

On the other hand, I've had a good deal more than £39,000 in P2P interest, ignoring tax effects,. More because that's only some platforms.

Albermarle

Sea_Shell said:

What percentage of peoples overall portfolios do you all have in P2P.

If I do invest, it'll probably be only 1% of our overall portfolio, in the short term initially.

A couple of years ago it was 5% of my investments.
Lending Works was the biggest ( unsecured consumer loans) By reading the P2P forum , I got a bit nervous and withdrew some of it but there is still a chunk in there earning reduced interest rates. Not clear what the end result might be , probably will make some interest overall but am not reinvesting.
Lending Crowd was smaller ( 'secured' and unsecured SME lending) . They have long since stopped offering new loans but the old ones are running down and I have made around 6% after defaults .
Assetz Capital I have stuck with and are now the biggest , although I have not bought or sold anything since Covid struck . Things are slowly getting back to normal . Overall made around 5% .
Also more unconventionally, I have some bonds bought on the Triodos Crowdfunding site/IFISA . They are various types of socially responsible lending ( solar panels, sheltered homes for people with learning disabilities , water turbine plants etc )Interest rates are around 4%.
Triodos bank are an established ethical bank , Although the bank does NOT guarantee loans on the crowdfunding site , they do bring some much needed professionalism to the due diligence on the loans . Something very much missing with some of the dodgier P2P companies. 

masonic

Sea_Shell said:

What percentage of peoples overall portfolios do you all have in P2P.

If I do invest, it'll probably be only 1% of our overall portfolio, in the short term initially.

Currently I'm treating my P2P holdings as "0%" as I'm only holding non-performing and non-tradeable loans. In reality I will see some return of capital and some interest from these, but these really are the dregs. At my peak I held a little under 15% in P2P and saw that as my limit. I won't be returning to the higher risk end of the market - the amount of work involved is just too much, and I really don't think I possess the ability to sort the wheat from the chaff. As for the lower risk end, I don't think the current returns pay enough of a risk premium, but what drove me to exit completely was the general focus on property development and associated brexit uncertainty (materials, labour, demand). Things don't seem to be playing out too badly on that front so far, so I'll be keeping it under review.

Thrugelmir

jamesd said:

Sea_Shell said:

How's the P2P landscape looking these days in our post-Covid* world?

I've just read the last 5 pages of this thread and it was all looking a bit shaky there for a while.

Most of my likely losses have been due to platform misconduct of some sort:

Impropriety on behalf of the borrower would have been higher up the list I'd have thought. Nothing like borrowing money from others and letting them carry the risk of failure. 

masonic

Thrugelmir said:

jamesd said:

Sea_Shell said:

How's the P2P landscape looking these days in our post-Covid* world?

I've just read the last 5 pages of this thread and it was all looking a bit shaky there for a while.

Most of my likely losses have been due to platform misconduct of some sort:

Impropriety on behalf of the borrower would have been higher up the list I'd have thought. Nothing like borrowing money from others and letting them carry the risk of failure. 

Most often, in my experience, the borrower pulled the wool over the lenders' eyes with assistance from the platform.

jamesd

Thrugelmir said:

jamesd said:

...
Most of my likely losses have been due to platform misconduct of some sort:
...

Impropriety on behalf of the borrower would have been higher up the list I'd have thought. Nothing like borrowing money from others and letting them carry the risk of failure. 

You might think so but that's not how it turned out in reality for me so far.

The difference is very significant because it's much easier to protect against borrower issues but harder when the platform itself is not accurately describing the loan and its risks. In the MoneyThing case a person who definitely knew about the earlier defaults was a director of MoneyThing for a while. With Collateral among many things money appears to have been taken from the client money account by those involved and also advanced in respect of loans when the money was provided to invest in a different loan. Collateral being the one where the FCA allowed the firm to appear to be FCA registered in their database when it wasn't really registered and under their supervision. 

There have of course been plenty of borrower issues along the way but those are easier to risk manage and generally likely to be smaller, since things like security may really exist and be accurately described. Of course there can be imperfections there. Some examples

1. A borrower threatened not to repay their loan unless another one was made. Platform refused and the borrower carried out the threat. Debt collection continues.
2. A VCT took over a loan and after a little while tried to negotiate a default with partial repayment. Ongoing. I'm both a lender on the loan and a shareholder in the VCT...
3. The stock of a car dealership which was security for its loan vanished when the dealership defaulted.
4. Stock at a car dealership was pledged as security for more than one loan, with some lenders not registering the charges, so others wouldn't be aware of the multiple pledging.
5. A borrower who provided security with the apparent intention of arguing that the loan agreements were invalid and he'd not have to repay and would get his security back. Debt collection continues.

Back to the platform side, a non-UK platform issued loans where it was responsible for debt collection costs. Subsequently it changed that for existing and new loans and now charges costs to capital and interest recovered, perhaps making a profit from the activity of its debt collection sub-units. I ceased new lending and commenced runoff since the platform had demonstrated a failure to meet my ethical expectations.

You can find all sorts of "cute" things going on in the details of individual P2P loans but even so it's in the platform end where the largest risk concentration exists because it's common to every loan on the platform.

What you need is a trustworthy platform that does appropriate due diligence on the loans and discloses what it finds so that potential lenders have accurate information on which to base their lending decisions. Then the platform needs to price the loan appropriately, and it's an FCA requirement that they do.

Even so, interest paid is substantial and is likely to well exceed even the worst case outcomes in the loans/platforms and I've no intention of ceasing P2P use. You just end up encountering all sorts of non-ethical and/or non-honest behaviour from assorted individuals along the way and have to remember that the margins in P2P are there to cover those risks.

Sometime I might try posting my P2P returns but at the moment it'd be useless since too much is up in the air. Still, I'm likely well ahead of bonds and I'm using P2P as a bond substitute...

Alexland

Alexland said:

0% in P2P

Well that's what I thought yesterday!

RateSetter just contacted me via text message and I called them back using the number published on their website and it seems that a couple of years ago I had neglected to withdraw a £100 bonus from my general account (maybe it was added after they removed login access?) and with growth it's now worth a little bit more. As part of closing themselves down they had tried to return the money to an old closed bank account (which they correctly identified, so probably not a scam) but it had bounced so now they are going to pay it into another bank account. I wonder if my wife will get a similar message or maybe that was my 1 year delayed bonus for referring my wife or possibly others? The offer terms are probably somewhere earlier in this thread. Neither of us can login anymore.

Nardge

Good afternoon,

Zopa are deciding to focus on their Bank and are ditching P2P lending.

They'll buy everyone's investments at full value.

You can read an insightful piece here: 

The Real Reason Zopa Is Closing Its P2P Arm - 4thWay

With Kind Regards

Nardge

Good afternoon,

As of today Lending Works are closing to retail investors too.

This leaves Assetz Capital and Lending Crowd as the two remaining Business Loan companies open to the general public.

Thankfully Property Loan peer-to-peer companies aren't going the same way!

Best Wishes 

Aceace

Nardge said:

Good afternoon,

As of today Lending Crowd are closing to retail investors too.

This leaves Assetz Capital and Lending Crowd as the two remaining Business Loan companies open to the general public.

Thankfully Property Loan peer-to-peer companies aren't going the same way!

Best Wishes 

It's Lending Works that are closing. ABLrate and Qardus are still in the business lending market. 

EDIT:  RebuildingSociety are also still doing business loans.