Peer-to-peer lending sites: MSE guide discussion

keyboardworrier wrote: »

I've been crunching some numbers and in the very worst case scenarios I can envisage in the situations I am involved in (Collateral admin, Lendy defaults etc,MoneyThing defaults) I will still come out with a profit, which is quite remarkable. This is thanks to the lower but seemingly safer (this is just my opinion!) returns from platforms such as Ratesetter, Assetz Capital, Kuflink, Lending Works.) The FCA will be watching a certain situation closely but they will not get involved, they will likely just stop non institutional investors getting involved with P2P, which I am starting to think may be a wise idea.

I have learnt that my risk tolerance is far higher than I ever imagined due to some of these sagas which is a valuable lesson for me.

Interesting, yes the least hassles it would seem would be from the likes of Lending Works at the moment and those styles of accounts. Did you work out your P2P rate of return taking in the worst case scenarios and what profit you would of came out with?


My P2P overall profit will depend if I get anything back from Collateral as I would of made profit on the rest asides MT until such times the other MT defaults are sorted out. Collateral was my biggest blow like many, but thankfully it was £4500 odd out of 17K in P2P at the time due to spreading platforms.



I can take risk and learnt from it as well, I decided also after a bit of time to stop chasing losses in P2P, as far as I am concerned Collateral is a loss until something is returned and that helped put the hammer down on me with it. I take it as a lesson as I would of likely went higher into P2P and got deeper into more problems down the line I feel.



You gotta ask yourself was all the hassles and time worth the real rate of return of your overall P2P compared to other options. .

keyboardworrier wrote: »

I added up the interest received and then looked at the worst case scenarios such as 100% loss in Collateral (very unlikely but possible) 100% + loss in a certain Lendy loan etc. My calculations are based on nothing else going wrong otherwise I would be in the red. The profit would be very minor and definitely not worth the trouble, but if you go into a lions den and come out still alive it's good news!


I understand what you mean about the feeling of chasing losses, P2P isn't for the feint hearted that's for sure. I should have just put it in the stock market, a 50% drop would be less stressful than all of this!

Yes getting out of the lions den alive is good news! I feel I just about kept my shirt on my back haha :rotfl:


Yes that is the feeling I came to in the end about chasing P2P losses, also defaults is part of it and seeing the mess involved with some recovery processes and poor valuations and factoring in time, which can easily run into a year or more, I thought start to get out this and move anything back over to stocks and leave it. .



Completely agree a 50% stock drop would be less stressful than all of this! and how I would of loved that Collateral money back to have fired into stocks during this recent dip



Fingers crossed the issues will work out!

stehouk wrote: »

Can you tell me what you found appealing about collateral ?
I looked at them before the collapse and decided against investing and moved into lending works at 6% I'm happy with that and no stress at all, I have also been with ratesetter for 3 years now, again 5-6%.
Not all p2p is stressful and can be rewarding, i wonder if people that join p2p think too much about the risks involved and go chasing higher returns to justify it but ultimately increase their risk of defaults.

The appeal to many was the jewellery bling type of loans and of course the rate for this. Many got frustrated once bling started to go down and they went very property development. This got a bit worrying tbh.


Don't forget we were mislead about the FCA they conned many a savvy investor and was plausible and when it was good it was nearly too good and a couple of car defaults was dealt with very quickly and capital returned. Also mostly 6 month terms rather than 5 years etc at high rate.


I'd agree not all p2p carried the same risks, but personally for 5 or 6% returns on 5 year loans I'd prefer to be stock invested based which was why I decided to pull funds back to stocks from accounts I was with like ratesetter and LW.


Some investment trusts pay 5% yield with capital growth potential for example.



Lower rate accounts carry risk still they are young companies so I wouldn't underestimate platform failure once your through it once it's not something I want to try and be involved in twice.


I'm sure others can add on collateral and I had 7 or 8 platforms spread. Hope that helps.

stehouk wrote: »

Thanks for the info, i'm not being critical of the people that invested i'd just like to know how they managed to draw investors into the failing platform so i don't make the same mistake in the future.

No problem at all with the info totally understand what you mean in asking and sharing experiences helps us all learn


Collateral while small was regarded as very professional at their mini peak which in turn drew some large investors at the time. There was a period it ran seemingly like clockwork. They openly said they had interim FCA permission which it turned out they didn't have which ended things abruptly. I was getting a bit uneasy pior to this with heavy focus going to development loans and some slow filling loans towards the end. For a period they were nearly like the blue chip of niche p2p and I read many of their interactions on the p2p forum and it appeared above board.


As others pointed out to me several months ago here and it did take a while to register I'll admit, the next UK recession will again test p2p and defaults. In the young history only zopa has been through the likes of the credit crunch. I started a bit with zopa when it opened around 2005 I think.


My opinion is 5 years is a long time in loans for returns that are not drastically impressive or above the normal, provision funds are not a guarantee, so prefer stock's for money I'm prepared to sit on, which will be beyond 5 years anyway.



Also understanding the lack of p2p liquidity when you experience it draws things out and the total unwinding process could fall into several years in some cases. I can only imagine it during a recession and the UK is on a rocky road with brexit and we will need to see how things react to this also.

masonic wrote: »

They did their market research - building a platform that incorporated the best features of others that were held in high regard. They were responsive to feedback. It transpires they courted the favour of a group of high profile, highly respected lenders who formed a syndicate and invested on preferential terms, while giving the platform credibility through their patronage. They opened their doors to one purported investor who played the part of auditor and released a complimentary report that built up lender confidence further. It was voted runner up in the "P2P Independent Forum P2P platform 2017".

In other hands, it really could have been something special. But, as it transpired, it was trading on the regulatory permissions of another firm due to either incompetence or fraud. Its failure was due to that catching up to it.

It's one of the risks inherent to this "light touch regulation" area of the financial services industry, and while there are lessons we can learn (about regulatory permissions in particular), next time it will surely be some other vagary that wouldn't be apparent to any hapless consumer.

FCA really needs to decide either to regulate P2P properly or give it the same status as unregulated bonds.

Perfectly explained on Collateral and your last part on the FCA is 100% bang on.