Funding circle repayment warning

Brindas

Hi
Just a warning to anyone thinking if using Funding circle as saveings platform,
I put my funds for sale on 7/6/19. As yet over 100 days later, it has still not sold.
See below extract of email from Funding circle
Whilst loan part sale times cannot be guaranteed, loan parts sold between 04/09/19 and 10/09/19 took on average 105 days to sell. We have seen that the days have been increasing week on week, and being very honest and transparent with you in the short term it will continue to slowly increase. Management are aware and in the long term are looking at ways of managing the liquidity on the platform and hopefully decreasing selling times.
This is correct, as we can not predict the future we can only provide previous figures. Loan parts that were listed between on average 105 days ago sold between 04/09/19 and 10/09/19.
I also asked by email how much I would recieve and they couldnt tell me.
I have used Ratesetter and compared to Funding circle it may be lower rates, but it works a lot better.
Just thought I'd post a warning to anyone thinking have using them
I will post how much I got in interest, When I finally get it

Thrugelmir

Brindas wrote: »

Just a warning to anyone thinking if using Funding circle as saveings platform,

Did you understand what you were investing in before taking the leap.

Funding Circle is a peer-to-peer lending marketplace that allows investors to lend money directly to small and medium-sized businesses.

Nothing about being a savings platform.

Bravepants

It's not a savings platform, it's basically sub-prime lending, as are ALL P2P lending companies...it's the same type of lending that led to the 2008 global financial crisis.


I have dabbled in P2P in the past, but the most I managed was to break even. I have about £800 stuck in Lendy who have gone into adminstration, and THEY were mainly based on "asset backed" property loans.


If people don't want to buy your loan parts, they don't have to.

SonOf

Just a warning to anyone thinking if using Funding circle as saveings platform,

If anyone using any P2P thinks of them as a savings platform then they shouldn't invest. It's a risk-based investment option with a wide variety in the risk levels. Some options are particularly risky in terms of capital return and liquidity.

itwasntme001

Everyone is exiting funding circle it seems so it looks like that is the reason you havent sold your loans yet. The irony is that your post may make others think twice in investing or start selling their FC loans as well, further delaying your own loans from being sold!

DrSyn

SAVINGS: Money is in a safe place & not at risk.

INVESTING: Putting your money at risk where there is the potential loss of all your money.

Funding circle & Ratesetter are both in peer to peer lending platforms.

Please explain how lending money which is investing, becomes savings?

seacaitch

Brindas wrote: »

"Management are aware and in the long term are looking at ways of managing the liquidity on the platform and hopefully decreasing selling times."

I don't really follow P2P since it's a distinctly unattractive asset class to me in terms of risk:reward ratios...

But, for a secondary market to function effectively requires a price discovery mechanism.

As I understand it (correct me if I'm wrong!), FC's secondary market currently has no price discovery mechanism and hence when credit conditions deteriorated liquidity evaporated. Quelle surprise. Who's going to buy at par when credit risk has significantly increased? I vaguely recall that a couple of years or so ago FC's secondary market was a "little more" sophisticated and sellers could sell below par, but that model was binned. Is that right?

Until the secondary market functions like a proper secondary market with price discovery to enable investors to express views on credit risk and inflation (eg. "I'll buy your loan at 37p in the £"), then it's never going to work properly.

But doing that would make it much clearer this wasn't a savings account proxy, as some might think, and instead was (as mentioned above) v risky subprime lending, with all the risk that entails, ie. bargepole territory for risk averse regular punters.

itwasntme001

seacaitch wrote: »

I don't really follow P2P since it's a distinctly unattractive asset class to me in terms of risk:reward ratios...

But, for a secondary market to function effectively requires a price discovery mechanism.

As I understand it (correct me if I'm wrong!), FC's secondary market currently has no price discovery mechanism and hence when credit conditions deteriorated liquidity evaporated. Quelle surprise. Who's going to buy at par when credit risk has significantly increased? I vaguely recall that a couple of years or so ago FC's secondary market was a "little more" sophisticated and sellers could sell below par, but that model was binned. Is that right?

Until the secondary market functions like a proper secondary market with price discovery to enable investors to express views on credit risk and inflation (eg. "I'll buy your loan at 37p in the £"), then it's never going to work properly.

But doing that would make it much clearer this wasn't a savings account proxy, as some might think, and instead was (as mentioned above) v risky subprime lending, with all the risk that entails, ie. bargepole territory for risk averse regular punters.

This is mostly correct however price discovery does not guarantee liquidity as there can be a scenario whereby no one wants to buy at any price. Typically this can happen when not enough information about the borrower is available which is very true generally for P2P.

Brindas

Thanks for all the replies that seem to discuss weather or not its a saving platform. I think the point is it is not an investment and it is probably somewhere that people would put savings ie money they don't need for daily expenses. Sorry for any misunderstanding Yes I did know what I was putting my money into as I have used Rate setter & Zoopla.
What I didn't expect, which was the reason for the post, is to wait over 100 days
I just want to warn anyone else who may be trying to get a bit of extra interest in the difficult times.

Cheers

itwasntme001

Brindas wrote: »

Thanks for all the replies that seem to discuss weather or not its a saving platform. I think the point is it is not an investment and it is probably somewhere that people would put savings ie money they don't need for daily expenses. Sorry for any misunderstanding Yes I did know what I was putting my money into as I have used Rate setter & Zoopla.
What I didn't expect, which was the reason for the post, is to wait over 100 days
I just want to warn anyone else who may be trying to get a bit of extra interest in the difficult times.

Cheers

No the point is it is not a savings product but an investment product and a very bad investment as well. You seem very naive to think it is savings especially after few posts above from other members of this board have told you it certainly is not savings.


You seem to have not understood very well what you invested in, so just treat it as a good (and expensive?) lesson.

MarkCarnage

I looked long and hard at P2P, and put a token(ish) amount in Ratesetter which has done ok as its business model seems sounder. Minor gripe is the early settlement of loans with recycled cash not going back on 1 year fixed. However, I've had all interest paid to date and capital repaid twice in full from loans....

I looked at a number of others, but the quality of lending looked very poor on many, even supposedly asset backed, and these guys are essentially lending your money without any skin in the game themselves often. Remember, they are lending when the banks aren't - and often for good reason. Chickens appear to be coming home to roost on some of these in last year or so.

I have instead put a small amount into a specialist investment trust focused on special situation property lending, with quality collateral and generally senior debt. Typically 50-60% equity financed. Part of the portfolio is in liquid IG credit too, so they can draw down quickly when a lending opportunity arises. Get a 7% yield on it at present. It is niche, concentrated and not riskless, but I think the risk/reward is better than P2P.