P2P: Saving Stream (AKA SavingStream)

masonic

The big one for me is that SS has been caught out on a number of recent occasions communicating false information to lenders in the loan particulars, as well as leaving out important negative factors lenders need to be aware of. Aside from the obvious risks associated with being unable to trust information provided by SS, these are clear breaches of FCA regulations that could prevent SS from getting full FCA authorisation.

They have not been forthcoming with lenders about a group of 6 loans that appear to be on the brink of default and SS is currently negotiating a recovery. Another loan, where the borrower is in administration and SS has appointed receivers, has just been updated with no mention of these important events.

There are a significant number of other loans that are not being serviced by the borrowers and could also soon be in default - instead SS are paying interest out of their own pocket to hide this fact from lenders (a recent change of policy since previously they would only allow loans to continue if the borrower serviced any additional interest payments).

Perhaps this is minor compared to the above, but SS has also changed its T&Cs to remove some of its requirements to provide information about loan contracts to lenders. This was done without informing lenders about the change, which is to their disadvantage.

taylornj

masonic wrote: »

I have mostly been topping up my holdings at MoneyThing. Right now there is a fair bit available as people are selling on the secondary market to fund a new loan. There are also a couple of loans on the primary market at Ablrate. I'll be sticking the remainder (which will not be a large sum) in a newer platform, Collateral, that I've been using for a while and have been fairly impressed with.

I was one selling a little on MoneyThing in the past couple of days, 10% loans with short terms left to fund the 1st and 2nd bite of the new 11% loan and pick up the AE renewal @ 12%. There isn't enough available at MoneyThing, I've already had to make withdrawals with no where to put funds when previous loans where repaid. Hoping for some more loans on MoneyThing. The up coming AE renewal at £25 each is not going to reduce holding at SavingString by any significant amount.

Likewise Ablrate, the couple of loans I subscribed to already on the first day. Really waiting on next new loan. Have enough in existing loans, maybe could use the secondary market to add some more but don't want too much in single loans.

Collateral was one I've had been thinking about applying to. Till now SavingString, MoneyThing and Ablrate have kept me busy.

jamesd

Said a borrower was an individual when it was really a limited liability company part owned by them and gave a misleading valuation far above the purchase price and planning permission which didn't exist. Now it's defaulted even getting the purchase price is looking hard.

Didn't mention that another borrower was due to be sentenced for a crime a few days after loan filling and could have gone to prison but got their ban from being a director extended for another five years instead. Gave a residential use valuation when the planning inspector had said that use must not be allowed to lapse into residential.

Routinely present misleadingly high valuations which make the LTVs look better, appearing to remove significant things from some valuation reports.

Maybe the least trustworthy British P2P platform. Certainly the least impressive I've looked at.

Beyond that they now seem to be using interest rates to lenders based on whether a loan can be filled easily, not risk. So lenders aren't getting compensated for the level of risk being taken while they may be keeping or increasing the cut they get while not taking the risk.

jamesd

Collateral is one I've been looking at as well. Funding Secure also has some interesting features.

masonic

taylornj wrote: »

I was one selling a little on MoneyThing in the past couple of days, 10% loans with short terms left to fund the 1st and 2nd bite of the new 11% loan and pick up the AE renewal @ 12%. There isn't enough available at MoneyThing, I've already had to make withdrawals with no where to put funds when previous loans where repaid. Hoping for some more loans on MoneyThing. The up coming AE renewal at £25 each is not going to reduce holding at SavingString by any significant amount.

I've done surprisingly well by checking in periodically to look for availability on the secondary market. Also, as the AE loans are all potentially going to be redeemed in the summer, I'd expect people will start rotating out of these and into new opportunities as they arise.

I'd second Funding Secure as another platform to look at. It does things a little differently with respect to interest payments (their model originates from the standard pawn buyback agreement in which interest is paid at redemption rather than during the term), which means loans are a bit riskier than they might initially appear, but transparency and communication are good. There is currently quite a bit available on the primary market. The way in which their secondary market works makes it useless for buying if you are a taxpayer, but you can sell on the SM with rolled up interest to remove your tax liability.

economic

i also wrote something on SS about the more unforseen risks with SS in terms of their balance sheet. essentially you are not secured, just an unsecured lender. im pulling my money out as i wouldnt want to have much with them anyay (max i have and willing to have is 10k), and just not worth worrying about so will just withdraw.

https://forums.moneysavingexpert.com/discussion/5607991

jamesd

I think that you missed the main threat to the platform: loan proposals either containing inaccurate information or not mentioning material information relevant to a lending decision. That leaves the platform responsible if the loan defaults, something that wouldn't be the case otherwise.

A recent unfortunate example included:
1. Valuation on residential property basis when the planning inspector apparently said that use must not be allowed to lapse into residential and a high court appeal against this seems to have been abandoned.
2. Borrower convicted of the crime of acting as a director while banned and due for sentencing that could have included a prison sentence a few days after the loan was made. The sentencing judge said that they were lucky not to be imprisoned and imposed a fine and another five years after the end of the existing ban.

That's not the sort of thing that you want to see at any P2P platform because you can't make a proper lending decision with that sort of thing happening and no way to know which of the loan promotions contain all you need to know and which don't.

economic

jamesd wrote: »

I think that you missed the main threat to the platform: loan proposals either containing inaccurate information or not mentioning material information relevant to a lending decision. That leaves the platform responsible if the loan defaults, something that wouldn't be the case otherwise.

A recent unfortunate example included:
1. Valuation on residential property basis when the planning inspector apparently said that use must not be allowed to lapse into residential and a high court appeal against this seems to have been abandoned.
2. Borrower convicted of the crime of acting as a director while banned and due for sentencing that could have included a prison sentence a few days after the loan was made. The sentencing judge said that they were lucky not to be imprisoned and imposed a fine and another five years after the end of the existing ban.

That's not the sort of thing that you want to see at any P2P platform because you can't make a proper lending decision with that sort of thing happening and no way to know which of the loan promotions contain all you need to know and which don't.

but couldnt these just be rare cases?

Malthusian

jamesd wrote: »

1. Valuation on residential property basis when the planning inspector apparently said that use must not be allowed to lapse into residential and a high court appeal against this seems to have been abandoned.
2. Borrower convicted of the crime of acting as a director while banned and due for sentencing that could have included a prison sentence a few days after the loan was made. The sentencing judge said that they were lucky not to be imprisoned and imposed a fine and another five years after the end of the existing ban.

Traditionally, people making these types of loans would have done due diligence up the wazoo to prevent such things occurring. I worked very briefly in due diligence and the idea that a corporate finance deal could have gone ahead without somebody noticing that the director was banned from acting as one is simply inconceivable. Same with the first one.

The great selling point of P2P seems to be its ability to bring people together who are happy to chuck money at things for 12% interest without doing due diligence, and enough of them that you can get a worthwhile sum of money off them.

jamesd

economic wrote: »

but couldnt these just be rare cases?

Like the one where they said the borrower was an individual and it was really a limited company ten percent owned by them?

They haven't done enough loans for these to be rare and unless you check everything yourself every time, which you can't do in the ones where they don't tell you the borrower, you've no way to know which loans have reliable descriptions and which don't.