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Is P2P and mini-bonds about to unravel?

Any other investment discussions eg. peer to peer lending
Gan020
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Is P2P and mini-bonds about to unravel?

#268797

Postby Gan020 » December 3rd, 2019, 1:54 pm

First minibonds. FCA bans mass marketing

https://www.fca.org.uk/news/press-relea ... -consumers

Most of the mini-bonds (regardless of how well run or dubious their character) promise return of capital after a fixed period. Say 2 years, 5 years, 7 years whatever. One wonders though how many mini-bonds are being sold to replace existing mini-bonds by the same company (in the same kind of parallel that banks provide fixed rate bonds for say 5 years to savers but use them to provide 30 year loans to borrowers, noting not all mini-bonds work this way as some are for specific projects)

If a number of mini-bond providers (however few) can't survive (or rather repay the bond at it's due date as promised) without rolling over those bonds to existing or new customers (as they have no route to market due to adverstisting ban) will we have a run on the mini-bond providers as the fear sets in regardless of whether it is warranted?


P2P. thanks to dspp on this thread viewtopic.php?f=78&t=20676

Lendy P2P is in liquidation but at the moment the investors will have to pay the liquidators fees which will hurt for sure. Now whilst I'm sure some (the media) will argue the government should pay the fees, P2P is not covered by the £85k limit and the promotional material has been clear from the start so I can't see the government stepping in.
Which leaves investors facing even more losses.
Same question really? We will see investors pulling back from this, causing for example Funding Circle's economies of scale proposition to fall apart and then a run on the P2P providers as it becomes apparent some of these providers will fail (perhaps some consolidation in the sector might avoid this??)

Gan020
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Re: Is P2P and mini-bonds about to unravel?

#268845

Postby Gan020 » December 3rd, 2019, 4:23 pm

P2P Zopa turning itself into a bank...

https://www.ft.com/content/fc3833c0-15e ... 03645ac406

JohnB
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Re: Is P2P and mini-bonds about to unravel?

#268851

Postby JohnB » December 3rd, 2019, 4:39 pm

As someone with money with Lendy and Funding Secure, I want all my money out of p2p for a year now, but its proving very hard. Even providers that are still going, like Funding Circle, have got 5 month waiting lists to sell holdings, so have just introduced a round-robin system so your withdrawal trickles out.

Dod101
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Re: Is P2P and mini-bonds about to unravel?

#268874

Postby Dod101 » December 3rd, 2019, 5:35 pm

JohnB wrote:As someone with money with Lendy and Funding Secure, I want all my money out of p2p for a year now, but its proving very hard. Even providers that are still going, like Funding Circle, have got 5 month waiting lists to sell holdings, so have just introduced a round-robin system so your withdrawal trickles out.


Sounds slightly better than funds run by one Woodford. What is 'a round robin system so that your money trickles out?'

Dod

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Re: Is P2P and mini-bonds about to unravel?

#268941

Postby JohnB » December 3rd, 2019, 9:53 pm

All the loan parts up for sale are assigned to buyers randomly (with a 1.5% discount to incentivise them). If there are 200 times more loan parts than buyers take on each day, you will get back 0.5% of your sales each day, ish

This *200 ratio is realistic as new money dries up, and of course the platform wants to keep bringing in new loans.

Previously you asked to sell, and get it all in one go, but the waiting list rose over 200 days. New system is better, but you end up with dribs and drabs of money being returned

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Re: Is P2P and mini-bonds about to unravel?

#269675

Postby JohnB » December 6th, 2019, 5:28 pm

MoneyThing have decided to give up, and go into a "orderly winddown"

3 of the 4 p2p investments I had have gone bad. I know how to pick 'em!

dspp
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Re: Is P2P and mini-bonds about to unravel?

#269787

Postby dspp » December 7th, 2019, 11:13 am

JohnB wrote:MoneyThing have decided to give up, and go into a "orderly winddown"

3 of the 4 p2p investments I had have gone bad. I know how to pick 'em!


Some of us have been saying this for a long time

viewtopic.php?p=59874#p59874

"Re: Zopa scraps Safeguard
#59874Postby dspp » June 13th, 2017, 3:55 pm
So how long until there is a mis-selling scandal re P2P lending ?"


If TMF boards still existed you would find similar warnings from several of us going back long ago. Provided no public funds are involved in anything other than prosecutions for fraud, then hopefully this serves as a salutary TANSTAAFL warning. Good luck in trying to get anything out of any of these vehicles at this point.

regards, dspp

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Re: Is P2P and mini-bonds about to unravel?

#282737

Postby Gan020 » February 6th, 2020, 1:26 pm


ursaminortaur
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Re: Is P2P and mini-bonds about to unravel?

#319396

Postby ursaminortaur » June 18th, 2020, 1:02 pm

The FCA is making the temporary ban on marketing mini-bonds to retail customers it introduced in January permanent.


https://www.ft.com/content/74ce6046-34f2-41c2-8596-4b57b26a7efb

UK regulator permanently bans marketing of mini bonds
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Britain’s financial regulator is to ban the marketing of high-risk “mini bonds” to retail investors permanently, after nearly 12,000 pensioners and small savers lost £236m in the collapse of London Capital and Finance.

On Thursday, the Financial Conduct Authority said it would fully implement the temporary prohibition it introduced in January — and extend it to other speculative investments that are hard to trade.

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Re: Is P2P and mini-bonds about to unravel?

#319404

Postby bluedonkey » June 18th, 2020, 1:24 pm

A lesson to be filed under "chasing yield"?


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