Im getting a little worried about Zopa Peer to Peer lending.

TUVOK

I'm reading today that the 'City regulator' is worried about peer to Peer firms plans for winding down.
I have some money invested in Zopa and did have with Ratesetter.

I would like to realize as quickly as possible to withdraw my investment money in Zopa and put it to use else where.
At present I am withdrawing via the holding account, it would seem from comments on this thread one way would be to sell active loans which are doing well?
Is there a penalty for doing this? I'm afraid that I do and always have found the P2P structure a bit confusing.

Aceace

TUVOK said:

I'm reading today that the 'City regulator' is worried about peer to Peer firms plans for winding down.
I have some money invested in Zopa and did have with Ratesetter.

I would like to realize as quickly as possible to withdraw my investment money in Zopa and put it to use else where.
At present I am withdrawing via the holding account, it would seem from comments on this thread one way would be to sell active loans which are doing well?
Is there a penalty for doing this? I'm afraid that I do and always have found the P2P structure a bit confusing.

Yes, there's a 1% admin fee for selling loans plus a Market Rate Adjustment.  Here's what Zopa says about the MRA:

Will I receive all my outstanding capital back? What is a "market rate adjustment"?

There may be situations where the interest rate on loans you wish to sell is lower than the current market rates. So that other lenders can still buy those loans from you, an extra amount needs to be credited to them. This amount represents the extra interest they would expect to earn if they lent out the same amount of money in a similar loan, but at the current rate.

There are reports of being charged as much as 38% MRA fee for some loans on the P2P Independent Forum. 

You can go through the selling process to see what the "estimated" MRA fee would be for you and cancel the sale if you don't like the estimate. 

EDIT: I just tried this for my account. The Estimated MRA was 13.1% (plus the 1% admin fee). 

TUVOK

Thank you very much, your info will enable be to understand better and make a start on estimating profit/losses on with drawing money.

jamesd

It's worth remembering that as loans get older the percentage of each monthly payment that is capital increases. If you've mostly got older loans you might find that you're already getting a suitable capital repayment rate.

One possible reason for FCA concerns is places like MoneyThing where there were not sufficient drawdown provisions and where the administrator of the insolvent company is going to court to get a determination of whether MoneyThing has the right to take charges from repayments on defaulted loans before lenders get paid. If the court says no the administrator has said that they will then go to court to get the power to charge lenders anyway. I was unhappy with the terms so I never accepted the agreement that introduced priority for MoneyThing, deliberately.

In the case of Zopa, the selling of loans has an issue that the FCA mentioned: the firm must ensure that the price is fair, including the risk to the loans, which may be higher than at origination. Just matching interest rates doesn't cover this issue and Zopa might need to discount or suspend sale of potentially impaired but not defaulted loans. If you and buyers were able to decide independently what price was fair there wouldn't be much issue but Zopa picks the loans and price of sale.

Han_naH

For those wishing to invest in Zopa - note these concerns -

- There is no update on your cash earning nothing in the account - you must look manually
- 20% of my cash was earning nothing at all
- The linked bank account was randomly removed more than once for 'verification' - yet it has not changed in a long time
- They don't indicate your bank account has been detached; no instant access
- You are unable to add another bank account into the form (it fails)
- You must submit proof, until then access to cash is blocked and remains so if they are not happy
- Over 40% of my interest earned this year was wiped off in defaults
- So a headline 4.5% rate is in fact 2.5%

- A prominent P2P blogger has never entertained using Zopa, as the loans are not secured
- Much better rates can be achieved with low LTV loans on other sites

ZeroSum

Zopa pulling out of P2P

https://www.altfi.com/article/8608_exclusive-zopa-exits-peer-to-peer-lending

Alexland

ZeroSum said:

Zopa pulling out of P2P

Looks like a good result for investors.

Dazed_and_C0nfused

Although buying the loan book presumably  means they will be the beneficiary of any recoveries coming back from previously defaulted loans?

Aceace

Great news for those of us that have been trying to escape. The returns at Zopa haven’t really been worth the risk for a long time now, especially when the 3 month plus cash drag was taken into account. Having our defaulted loans in arrears repaid in full to stop the closure dragging on is a bonus.

An obvious sellout from a poacher turned gamekeeper, but at least it seems it will be an honourable exit. Plenty more fish in the sea. 

EDIT: updated to make it clear that defaulted loans are not being repaid, just the loans that have not yet defaulted, including those in arrears. 

Nebulous2

Nebulous2 said:

I've just had the latest email. Encouraging me to take my money out. 78 days matching time for Zopa core. They have given up on peer-to-peer and are concentrating on their own bank. 

It's not often I'm able to say "I told you so" but this time I did.... 

Good result, particularly to provide a timely exit from poorly performing loans.