Peer-to-peer lending sites: MSE guide discussion

TheTracker

It does get tiring on this thread reading about referral codes. I for one applaud any removal of such posts.

agent69

Trentenders wrote: »

What's wrong with Moneything?

Poor deal flow and no secondary market. How many loans are currently available to invest in?

jamesd

DiggerUK wrote: »

With highest possible returns at 6.5%

You really need to get a clue about the returns that are available. 6.5% is too low for me to be bothered with when I can get over 19% from one place (sorry, invitation only at the moment), 14-15% from another by being patient, over 12% from a couple. And all of those are for lending secured on property of some sort, some with protection funds on top. Nothing theoretical about them, they are where my own money is invested. Well, on one I'm getting over 24% XIRR so far but that's me...

DiggerUK wrote: »

If I borrow with security I would get a low rate, not a high rate.

You mean like the property developer who wanted to borrow £8 million for a development and offered a security land independently valued at £25 million? You might not have noticed but banks tend not to like property development deals and construction funding of all sorts. Which forces developers into more costly borrowing than standard mortgages, an area where P2P can be cheaper.

DiggerUK wrote: »

As has been pointed out, it would not be you that gets the security from the asset.

And why would that be so, given that in normal P2P deals the security is assigned to the lenders, so they get the proceeds of the sale of the security? You're doing a good job of showing that you don't really understand how it works and why it's done the way it's done.

DiggerUK wrote: »

Anybody who has to get a loan by offering security beyond their credit record must be a poor risk..._

Like the millionaire who's offered some of their car collection so they can buy a new car or the pawn shop chain that is borrowing to expand and making far more profit on their lending from the new shops they are starting with the money than their P2P borrowing is costing them.

DiggerUK wrote: »

Somebody at the Daily Mail is hacking this thread..

Hardly. Their sources appear to be the P2P Independent Forum discussions, from where they could "obtain" their numbers. They didn't even get "as high as 19.9 per cent" right since it's possisble to invest in FCA regulated P2P at over 80% - though that's for unsecured lending to consumers in places I wouldn't want to lend to and with no protection fund.

The 19.9% one I know about is secured on physical property, cars, and an additional protection from the P2P business on top of that. It's not Buy2LetCars.

Then they go on to write rubbish like "Equally, if the peer-to-peer firm goes bust, savers’ money is not protected" when in fact it's a condition of approval that there has to be a run-off plan in place so that the lenders get repaid even if the platform goes bust.

That's not the big risk. The big risk is fraud by a platform because there is no FSCS protection against fraud with P2P, not even the £50k fraud protection for normal investments.

jamesd

agent69 wrote: »

Poor deal flow and no secondary market. How many loans are currently available to invest in?

Today none. On Monday one, currently available for review by prospective lenders. £40k borrowed secured by a car valued at £80k. In a few weeks that one will be replaced by a refinancing using a vehicle worth more than the total £150k that this borrower will have borrowed at that time, assuming that the Monday loan is filled.

Recent post about their anticipated loan pipeline is here.

One of the normal characteristics of relatively young P2P firms is limited deal flow and the need for a bit of patience. The rewards can be quite lucrative but it does take that willingness not to just stick the money in and have it all happen immediately. Just the nature of growing businesses in this field

Very different thing from the platforms that seem to actually have almost no deal flow, rather than intermittent flow. The no flow ones seem destined to wind up in time.

rwgray

masonic wrote: »

I don't think he really needs help finding it. If you browse the Funding Circle thread in the referrer's board, you'll see he's been quite active there over a few years, posting as recently as July.

I'm sorry, I had no idea that that (FC) thread was part of a separate Referrer's Board - I was making no distinction at all between that thread and this (p2p) thread, which would explain why I was including personal links on both threads indiscriminately!

Each time there is an update on either, it comes to me by email and I respond accordingly - or add new information when I have it... without reference to differences in posting conventions.

I'll try to take all your comments on board in future, but as I suggested, the structure of the forums doesn't lend itself to locating relevant threads from scratch from the top-level-down, one tends to find them through more haphazard searching, and potentially found them a looooong time ago!

Any more threads that you would recommend for p2p investors now?

Rich.x

masonic

rwgray wrote: »

I'll try to take all your comments on board in future, but as I suggested, the structure of the forums doesn't lend itself to locating relevant threads from scratch from the top-level-down, one tends to find them through more haphazard searching, and potentially found them a looooong time ago!

I rarely use searching at all. I just browse the specific boards of interest to me. If you are struggling with navigating the forums, then the forum introduction guide may be useful. It's a series of videos showing how the various aspects of the site work. In particular, the "Navigating the Boards" video might be of some help.

Any more threads that you would recommend for p2p investors now?

There are dozens of threads discussing P2P. It's often easiest to do a Google search (using 'site:forums.moneysavingexpert.com' to restrict the search to this site): https://www.google.co.uk/search?q=P2P+site%3Aforums.moneysavingexpert.com

jamesd

The board of the Swedish P2P platform TrustBuddy have announced (scroll down for English version) that they have ceased all Swedish lending activities on instruction from the Swedish FSA because an ongoing investigation has so far found several breaches of internal and external regulation, [] amounts added by me:

• The Company has used lenders’ capital in violation of their instructions, or, without their permission. As a result, there is currently a 44 MSEK [£3.5 million] discrepancy between the amount owed to lenders and the available balance of the client bank accounts.
  
• The total amount currently lent out on the platform is approximately 300 MSEK [£23.89 million], of which, 37 MSEK [£2.95 million] is not assigned to lenders.
  
• The Company has re-assigned existing loans, a significant portion of which were likely non-performing, to new capital deployed by lenders.

The investigation indicates that these practices were likely in place since the TrustBuddy platform began operation.

All investors have had their accounts frozen during the investigation.

I don't know whether Swedish P2P has protection equivalent to the FSCS to reduce potential losses due to such events, UK regulation doesn't. TrustBuddy is a publicly listed company trading on the First North Nasdaq in Sweden. A planned rights issue for shareholders has been suspended.

Just to reinforce the message that has been given many times, the major risk of P2P is not the lending, it's the possibility of fraud at the P2P platform, which for UK platforms have no FSCS protection that would protect other investments from up to £50k of fraud loss. Diversification is vital.

TheTracker

So far I haven't really bought into the diversification is vital argument. The way I've seen it is you are trawling a larger net that's easier to get snagged, better to know the waters you're trawling. For instance by sticking with more regulated platforms (p2pfa) or platforms where you see borrowers receiving money (eg thincats). If anyone could start a bank, I wouldn't go using a whole selection of them, instead I'd make sure I had more robust trust in those I did use.

But I share the analysis that the impact and risk of platform fraud is higher than platform failure.

jamesd

TrustBuddy was big enough to even have a stock market listing. Someone who thinks safety is also quite likely to think that bigger is safer and potentially be caught out if they are concentrated.

The catch for us as lenders is that it is completely impractical for us as individuals to carry out the checks that might detect significant misconduct.

Since we can't do the checks that are needed to have justified high confidence we need to rely on diversification. Of course we don't have to diversify into all 100+ firms seeking FCA registration, we can pick enough of them so that the loss of all money in one wouldn't be unduly painful. Ten firms and with the interest rates available all a failure would do is cost a year of interest. Of course that can include the steps you're taking as well, just be aware that seeing some borrowers receiving money wouldn't identify the issues found at TrustBuddy.

agent69

jamesd wrote: »

Today none. On Monday one, currently available for review by prospective lenders. £40k borrowed secured by a car valued at £80k. In a few weeks that one will be replaced by a refinancing using a vehicle worth more than the total £150k that this borrower will have borrowed at that time, assuming that the Monday loan is filled..

So at best one on Monday and another in a few weeks time?

I rest my case