Page 1 of 3
Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 6:54 am
by Itsallaguess
Interesting article this morning from the Guardian, highlighting the perils of P2P lending -
Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’ -
A saver who has been trying to get her money out of the UK’s biggest “peer-to-peer” (P2P) website since August has been told her request is 19,050th in the queue for withdrawals.
Michelle Johnson signed up with RateSetter in 2019 and invested a total of £1,000. After changes at the firm in the summer, she asked to withdraw her money – but months later she is still trying to get hold of the bulk of her cash.
“Please could you investigate what is going on at RateSetter?” she asked us this week. She told us she was in a queue of thousands of people to remove her money, adding: “I’m scared I’ll never see it again.”https://www.theguardian.com/money/2020/oct/17/peer-to-peer-lending-savings-covid-pandemicCheers,
Itsallaguess
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 8:15 am
by jackdaww
i have £103 in my account .
so i have requested to withdraw most of it .
i am in a queue - " Requests in front of you 23,159 " !!!!!!!!!
no indication of timescale to withdrawal being expedited .
lucky i dont need it urgently isnt it !
ps.
confirmation email says ---
you should expect it to take over a month to complete from the date you made it.
perhaps by xmas then ??
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 10:47 am
by langley59
As I've posted before I'm in for tens of thousands on each of two platforms and not expecting much of it back soon on one (in a queue on Assetz) or indeed ever (bad loans at Thincats).
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 11:14 am
by ReformedCharacter
I definitely dodged a bullet there. I had quite a substantial sum with RS but towards the end of last year thought that the lowering of rates and the risk involved made the investment undesirable. Little did I know...
RC
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 11:25 am
by AsleepInYorkshire
I'm joining this conversation late and without a great deal of knowledge about this subject.
However, and with all humility is this a situation which could be categorised as "if it looks to good to be true, it probably is too good to be true". That's not a point scoring side swipe.
AiY
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 11:40 am
by Mike4
This strikes me as a non-story really.
The number of people ahead of you in the queue to withdraw seems irrelevant when the article doesn't say how many withdrawal requests they are completing each day, or what the terms of withdrawal were when she signed up. If the terms happened to say withdrawals require three months' notice, then what's the problem?
I suspect there is a problem though, and that more 'investors' are wanting their cash out than loans are being repaid, so the company has a cashflow problem. Even so, one would expect this to have been planned for by the company at the outset.
Edit to add:
In addition, as it is "peer to peer" lending, surely you can't get your cash back until the peer you lent it to re-pays it!
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 11:57 am
by Stompa
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 12:03 pm
by Mike4
Has "peer to peer" lending lost its original meaning?
It seems to me that for lenders to be able to get their cash back, the peer they lent it to needs to repay.
If investors' cash is now all lumped together into one big pot (as it must be for investors to be able to withdraw on demand), then it is no longer peer to peer lending in the strict sense of the term.
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 12:13 pm
by swill453
Mike4 wrote:This strikes me as a non-story really.
The number of people ahead of you in the queue to withdraw seems irrelevant when the article doesn't say how many withdrawal requests they are completing each day, or what the terms of withdrawal were when she signed up. If the terms happened to say withdrawals require three months' notice, then what's the problem?
It does hint at the time expected to wait:
As of 8 October, her account showed that her “queue positions” for these two sums were 19,095 and 19,096 respectively. Six days later, on 14 October, she had moved up to 19,050 and 19,051. At that rate, it would take almost seven years for her to get to the front of the queue.
Scott.
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 12:21 pm
by chas49
Mike4 wrote:Has "peer to peer" lending lost its original meaning?
It seems to me that for lenders to be able to get their cash back, the peer they lent it to needs to repay.
If investors' cash is now all lumped together into one big pot (as it must be for investors to be able to withdraw on demand), then it is no longer peer to peer lending in the strict sense of the term.
The terms of lending your money to Ratesetter are (broadly) that you can get it back when it's repaid (unless you reinvest it automatically), or ask for it back subject to the availability of someone else wanting to take on your loan. So it's either new investors wanting to put money into RS, or (more likely) people who are allowing their investments to roll-over as individual loans are repaid.
It is P2P in the sense that my money is lent out to other people, but if I invest (say) £1000 that isn't all lent to one person - it's split up amongst a whole load of borrowers so the risk is spread out..
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 12:51 pm
by Itsallaguess
chas49 wrote:
It is P2P in the sense that my money is lent out to other people, but if I invest (say) £1000 that isn't all lent to one person - it's split up amongst a whole load of borrowers so the risk is spread out..
That sounds a lot like
Collateralized debt obligations (CDO's)...
In the early 2000s, the debt underpinning CDOs was generally diversified, but by 2006–2007—when the CDO market grew to hundreds of billions of dollars—this had changed. CDO collateral became dominated by high risk (BBB or A) tranches recycled from other asset-backed securities, whose assets were usually subprime mortgages. These CDOs have been called "the engine that powered the mortgage supply chain" for subprime mortgages, and are credited with giving lenders greater incentive to make subprime loans, leading to the 2007-2009 subprime mortgage crisis.https://en.wikipedia.org/wiki/Collateralized_debt_obligationWhilst I've not got the best of memories, I seem to recall things not ending
too well regarding that whole '
Collateralized debt obligation' situation...
I've always had a real concern with the whole '
the risk is spread out' proposition regarding P2P lending, and whilst there's clearly times where improved investment rewards can be delivered by taking on more risk, the P2P side of things has always had a very strong smell associated with it from my point of view, and the Guardian story linked in my opening post suggests that those smells are not just imagined...
Cheers,
Itsallaguess
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 1:55 pm
by johnhemming
I did a bit of peer to peer, but it all looked a little uncontrollable to me. The problem is that in essence you are relying on the central organisation as to be effective at managing the loan finance. I do a small amount of commercial private lending. That I am a lot happier with as I know what is going on and am in control of the situation.
In many ways a good route for P2P would be more to introduce lenders to borrowers, but without standing in the middle as an intermediary for the loan. Otherwise it is really quite a bit more speculative than the secondary market.
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 2:08 pm
by RockRabbit
I'm with RS and put my withdrawal request in during March - I'm still in the queue. The queue only appears to reduce by a few dozen a week so if you are 19,050 you might have quite a wait.
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 4:09 pm
by jackdaww
RockRabbit wrote:I'm with RS and put my withdrawal request in during March - I'm still in the queue. The queue only appears to reduce by a few dozen a week so if you are 19,050 you might have quite a wait.
=====================
so when they say i will have a months wait , that is a porky ??
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 4:39 pm
by kempiejon
RockRabbit wrote:I'm with RS and put my withdrawal request in during March - I'm still in the queue. The queue only appears to reduce by a few dozen a week so if you are 19,050 you might have quite a wait.
I'm trying to get out of RS too, I've been watching the numbers and concur with about 100 per month, so with 19050 it'll be ages, I've been on the list since April, I am having regular returns as I was investing monthly and I'm down to my last hundred on loan.
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 18th, 2020, 4:43 pm
by Mike4
kempiejon wrote:I'm trying to get out of RS too, I've been watching the numbers and concur with about 100 per month, so with 19050 it'll be ages
Best part of 16 years actually, at that rate.
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 19th, 2020, 12:17 pm
by DrBunsenHoneydew
I joined ZOPA as a P2P lender in 2007, and added to my account for 3 years.
Exactly 10 years ago I got fed up with the high rates of bad debts and pressed the button to withdraw all my funds as quickly as possible.
I am still receiving periodic payments, albeit pennies per year now.
This is because loans that fell into default (but not to the extent of being written off completely) have been given extended time to repay the borrowed capital. I can see that taking "for ever", certainly metaphorically, but possibly literally, and being a nuisance for my executors.
It's a nightmare - please make it stop!
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 20th, 2020, 8:42 am
by Nocton
I've been with Ratesetter for years and have no worries about my money. I think that they have behaved very responsibly this year, halving interest rates for 6 months to allow the reserve fund to build up in preparation for a likely higher level of non-repayment than previous years. But still delivering a useful rate of interest, unlike NS and most BSs.
Mike4 wrote:Has "peer to peer" lending lost its original meaning? It seems to me that for lenders to be able to get their cash back, the peer they lent it to needs to repay.
If investors' cash is now all lumped together into one big pot (as it must be for investors to be able to withdraw on demand), then it is no longer peer to peer lending in the strict sense of the term.
Strictly speaking Mike4 you are correct and that makes it, at least the way RS operates, a much less risky investment than some true PtoPs. I put the level of risk somewhere between a building society and a FT100 bond.
When I look a the data on
https://www.ratesetter.com/investment-release-requests some of the figures on queue position look odd, and as Mike4 also says, rather meaningless.
RS is very transparent and open about the current Covid-19 'problem' the full statistics are here:
https://www.ratesetter.com/invest/statistics There is a lot of info, but he key ones for the current discussion are:
Interest Rate cover (before temp interest reduction) 69%
Capital Coverage Ratio (to cover expected future defaults) 153%
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 20th, 2020, 10:20 am
by Gan020
I find the interest rate cover and capital coverage ratios misleading because the values include future flows into the provision fund which have not happenned yet.
And since the future flows into the fund are almost double the current provision it skews the calculation badly.
The current bad debt provision is £7.2m compared with an lending book of £4,031m = 0.18%. Scary. I can see why they've cut rates and plan to build it up. Even at the target though of £23.4m that's still only 0.58%.
Also, it's interesting to note with a loan book of £4,031m and 87,000 investors that implies an average exposure of £46k per investor.
Um and with 692,000 borrowers that implies over 1% of the population has borrowed from ratesetter. Of course I can't really do it that way as many will be businesses but even so that's quite striking but there again my 1% includes children under the age of 18 etc.
Re: Peer-to-peer lending: ‘I’m 19,050th in the queue to get my savings back’
Posted: October 21st, 2020, 6:33 pm
by dspp
Itsallaguess wrote:Interesting article this morning from the Guardian, highlighting the perils of P2P lending -
Moderator Message:
Thread relocated to correct board following alert, regards, dspp