Kuflink P2P - changing Ts & Cs

masonic

Eyeful said:

masonic said:

janesmith said:

Masonic - as you know, accepting or rejecting the new terms has no bearing whatsoever on the return of one's capital at the point of maturity of the Fixed Term timeframe. One can try to make excuses for situation however one likes, but the fact is that I have only received around 55% of my capital and accrued interest on the due date whereas I was sold these schemes by Kuflink on the basic I would get all of it back on maturity. On the maturity of the identical Auto Invest schemes before these new changes were introduced, I and other investors would receive 100% of their capital and due interest.

Kuflink's loan book is a catastrophic state and it is highly likely that I and others lenders will not get a substantial ratio of our remaining 45% capital or interest back. Based on how long Kuflink's loans-in-default typically drag on for, even to get bits and bats of our remaining capital will certainly drag on for years and years.

Eyeful - you are right, I should have invested in the stock-market in a diversified fund. Believe me, I kick myself about it every day. I foolishly drank the kool aid about P-2-P in this country being a fairly reliable, highly regulated form of investing, with all the loans the platforms made being very diligently assessed and being asset-backed blah blah blah. Now I'm paying the price.

Yes, I agree that accepting or rejecting the new terms will likely have no bearing on your final outcome, unless you exercise the option to liquidate (for a fee). But I'd go further than that: the changes to the T&C themselves will likely have no bearing on your final outcome. What you have to understand is that it was always discretionary for Kuflink to repurchase non-performing loans and cover losses. This is a convenience they'd only ever be able to do during the good times when it didn't matter. The change to the T&C is a red herring when it comes to investor outcomes.

Up to 2024, I don't think there were any losses to be covered. However, in 2024/25, Kuflink, at its discretion, covered £315k of losses. To put that in perspective, its profit for the 2024 calendar year was £461k. In an analysis in the P2P Indie forum just after April 2024, the Autoinvest pool was estimated to contain around £20m in defaulted loans overall. That also coincided with a 30% drop in assets under management, meaning a lot of investments had to be repaid.

If you do the maths, 30% of £20m is an unaffordable sum for the platform to cover, so whether or not the T&Cs were changed, Kuflink would have no choice but to exercise its discretion and not use its own funds to cover borrower defaults. And the FCA would not allow any regulated firm, even in the "light touch" regulation of P2P, to expose themselves to such an existential risk.

I note that this level of defaults is proportionally higher than the total Kuflink loan book, because that contains both Autoinvest and Select Invest loan parts. It seems on the whole, those that chose their own loans to invest will be faring somewhat better, which is perhaps not surprising. I only ever used Select Invest, and my default rate is 1.8% by value (2 loans out of 39, with one almost fully repaying). I only used Kuflink in brief spells, one between 2018-2019 and another during 2022. Defaults started picking up in 2023, so I didn't go back for another bite of the cherry.

It's a very common pattern for young platforms to have a clean record over their first few years, then start carrying an increasing level of defaults as their loan book matures. It can take up to 5 years of forbearance and enforcement efforts for a delinquent loan to reach a final outcome. To Kuflink's credit, it did a better job here than most, and its loan book is certainly not in a catastrophic state. Nowhere near the state of those infamous platforms of the past mentioned upthread. Ultimately, the outcome for investors rests on the ability of the borrowers to repay. P2P, by its very nature is subprime, and more than that, borrowers would only resort to such an arrangement if no mainstream lender will touch them.

So losses are a fundamental part of P2P investing. Which is why you are made to jump through hoops by the FCA (proving you understand the risks - at least in theory) even to be allowed to invest. Even with the current challenges, I doubt anyone will see the level of losses at Kuflink that have been visited upon many of us who invested in the earlier platforms.

Sounds to me like insurance.
.
 Offer you the loan of an umbrella but only if it's not raining  & the long term weather forecast is "dry & sunny".
When the forecast is rain then they ask for the umbrella back 

That's why the FCA has discouraged such practices from the point they took over regulation of P2P. One cannot insure away the risks of P2P, any more than one can insure away the risks of investing in general. The initial position of the FCA in ~2019 was that platforms should not expose themselves to a risk of failure by taking on the same risks as the consumers lending through them. Because P2P is very risky and, as each investor must agree, these are investment "where there is a significant risk of losing all the money I invest".

As you say, these were really only schemes that would smooth returns during the good times, and they were not intended to insure away the systemic risks of the asset class, which are significant. Rather like a jacket that is described as "showerproof".

That said, the unsecured connected party lending described in the 4thway link in JustJ12345's post, even if it is only 6% of the pool, is very concerning. The sort of stuff that got revealed early into the sagas of Lendy, FundingSecure, and dare I mention, Collateral. It seems Kuflink had its prestigious 4thWay PLUS "Exceptional" rating pulled:

https://web.archive.org/web/20250905221247/https://www.4thway.co.uk/compare-peer-to-peer-lending-companies/

Those of us who are investors can log in and see an "Important Update":
"...An initial review identified that 5 out of 237 loans in the Pool were incorrectly labelled, and investors were not notified that certain loans were Related Party Loans (RPL) or SME loans..."

"...For a small number of loans the security held in respect of the loan is shares / debentures in small and medium sized enterprises (SMEs), and this may not have been clear from the information on our Platform. We acknowledge the importance of making accurate disclosures about all loans offered on our Platform, and we apologise for these errors..."

"As a result of these issues, the Pool is now closed to new investments, including:
    All new investments
    ISA transfer-ins
    Re-terms of existing investments, which will instead be cancelled and returned to your wallet"

"...our current intention is that we will cease to offer the auto-invest model..."

martinisfab

RE: ""...An initial review identified that 5 out of 237 loans in the Pool were incorrectly labelled, and investors were not notified that certain loans were Related Party Loans (RPL) or SME loans..."

- these RPL or SME loans were illegal loans given by Kuflink to their own rich Directors who have separate businesses and property portfolios. Cheeky of Kuflink's staff to secretly transfer large wads of investors' money to… themselves!

Kuflink is an absolutely awful company. Has severely mismanaged its lending so that around 93% of my investments are showing as being in default.

No wonder the FCA has imposed several crushing constraints on Kuflink's business.

Kuflink have now also taken away visibility of the accrued interest, default interest and key information for their investments. I will be contacting the FCA regarding this.

masonic

Thanks for the reminder to log in and check my account. A nice £200 was waiting for me, representing full capital recovery of my penultimate defaulted loan. Just leaving Church Drive NW9, which has already had an 84% recovery of capital and should come good. I still am owed some interest on a couple of the loans, but otherwise have escaped unscathed and with a pretty reasonable rate of return (somewhere north of 6%pa dependent on final recoveries).

You should really expect 100% of your loans to be in default when in wind-down, as all the performing loans pay back, leaving only the defaulted loans. The question now is how well they will handle those. So far, they seem to be doing a reasonable job from what I've seen. Though the updates are always a painful read with all of the delays and often obstructive borrower behaviours.

The loan stats are still available here: https://www.kuflink.com/statistics/

martinisfab

I'm glad you managed to recover £200 and hope your Church Drive NW9 investment returns your full capital. Good luck.

As far as myself and my friends and family members who also invested with Kuflink, we are significantly underwater. We think they have done an appalling job in terms of how they have handled matters over the last few years as regards how they have handled their loan-book and their investor relations. The fact that so many loans are in eternal default and that the FCA has imposed several crushing constraints on Kuflink's business speaks volumes.

For any newbies who find this thread from Google, I would hate for you to lose your money like so many others have, therefore avoid Kuflink like the plague! They are beyond awful and you are highly likely to lose your money.

As with other p2p businesses that have suffered similar problems, they will probably not be in business for long and go into administration.

See what investors say about them on Trustpilot and on other websites:

https://www.trustpilot.com/review/kuflink.com

Truspilot's summary of reviews:

"Evaluating 53 reviews, most reviewers were unhappy with their experience overall. People noted that recent changes to terms and conditions caused some concern. Many customers complained extensively about delayed payments and investment concerns affecting their returns. Furthermore, consumers reported frustrating delays when attempting to process refunds or manage their accounts."

Furthermore, expert P2P commentators have been very disparaging of Kuflink in recent times and urged extreme caution, including Laurence of The Financial Thing and Neil Faulkner of 4thWay.

Talking of 4thWay, see the following about Kuflink:

https://www.4thway.co.uk/candid-opinion/kuflink-in-trouble-with-the-financial-conduct-authority/

masonic

"As far as myself and my friends and family members who also invested with Kuflink, we are significantly underwater. We think they have done an appalling job in terms of how they have handled matters over the last few years as regards how they have handled their loan-book and their investor relations. The fact that so many loans are in eternal default and that the FCA has imposed several crushing constraints on Kuflink's business speaks volumes."

I think it is worth separating genuine platform malpractice from the unavoidable mechanical realities of how peer-to-peer lending operates when an asset class goes into terminal decline.

There is a difference between a loan being in default on a dashboard and an investor being significantly underwater. When a platform or product goes into wind-down, all performing loans naturally pay back first because they are functioning as expected. This creates an effect where the denominator shrinks while the non-performing loans remain stuck on the books. Any wind-down portfolio will inevitably trend toward a near-100% default metric simply because the good loans have already exited. Whether investors are actually underwater depends entirely on asset backing, valuations, and ultimate recoveries, not the current default badge on the portal.

My own loanbook has been 100% defaulted for years, yet capital recoveries have steadily trickled in to the point where I am on track to get all of my capital back. This is just one of the realities of P2P lending.

While it is easy to point the finger at Kuflink and call them appalling, the root issue here is common to P2P lending as a whole, rather than the failings of a single operator. The fundamental flaw of retail P2P models was always that they relied on continuous growth - pulling in fresh capital and writing new loans - to dilute default drag and mask the friction of bad debts.

When it comes to managing recoveries once a loan is in default, the evidence so far suggests they are doing what can reasonably be expected given the messy reality of property workouts. The legal processes around receiverships, repossession, and enforcement are inherently glacial and painful, particularly when borrowers act obstructively. Believe me, I've seen other platforms behave a lot worse and give investors a lot more reason for concern.

You've mentioned Trustpilot, P2P commentators, and affiliate marketers like 4thWay as sources of truth for the situation, but these are exactly the entities that were promoting these firms until recently. I would say they have some responsibility for pushing unwary investors into the hands of these firms, even if they've now abruptly done a U-turn.

Trustpilot obviously just blasts out the opinions of reviewers, but it is well known that even scams do well on Trustpilot because everyone thinks the scammers are great until they realise their money is gone. The others have purportedly done real research into Kuflink and others and rated them highly for years.

Perhaps people should just stick to mainstream investments. In the mean time I hope you, your friends, and your family see a strong recovery on your remaining holdings as the enforcement processes run their course. I've found from bitter experience, you stand to get a lot more of your money back in a situation like this where the platform keeps trading, then if it fails and the administrators get called in.