Experienced lenders exit Funding Circle

September 22nd, 2017
Funding Circle

Funding Circle has now withdrawn its manual lending (and selling) options and repaced these with a market model where lenders can only choose the risk, rather then the actual borrowers.  Unsurprisingly this has generated numerours discussion on the P2P Independent Forum, and a recent poll indicated that 45% of lenders who took part had suspended their lending, with a further 25% stating they had already exited the platform.  On a more positove note 30% of lenders were either continuing with their Funding Circle lending, or returning to the platform.  All of those lenders stated they would be selecting the "Balanced" risk bank at an estimated retirn of 7.5% AER, with none of them selecting the "Conservative" risk band with an estimated return of 4.8% AER.

Below is a flavour of the general comments:

I am winding down.  I spent the last few weeks selling off my more dubious parts and replacing them quite cheaply with better quality material, but as my portfolio repays I feel I can neither re-invest repayments nor invest new money because AutoBid will simply undo that good work.

Also, I have strong doubts about the claimed 7.5%.  I have had such a rash of defaults over the last month and late payments during the last week that I am left rather disillusioned.  Had this last week been more problem-free, I would probably have felt better and plonked a bit more cash in at the end.  But a new late loan 6 days out of 7 rather spoils the flavour.

Introducing Robo.cash

September 20th, 2017

The P2P market is undergoing significant growth at the moment and becoming an attractive investment tool that helps to diversify a portfolio of an experienced investor. Despite the great number of different P2P-lending platforms which appeared in previous years, there are new noteworthy platforms which started its work in 2017 too. Among them is Robo.cash working in a fully automated mode.

Robo.cash started its work in the market of the alternative finance in February 2017. Being registered in the Latvian commercial register, at the moment the platform works within the frames of the European Union. It attracts loans from Spain, Russia, and Kazakhstan via affiliated companies representing one financial holding founded by entrepreneur Sergey Sedov in 2010. In a quite short period of time of its work, SIA ROBOCASH has become a member of the Latvian Startup Association ‘Snartin.lv’ and the Alternative Financial Services Association of Latvia (LAFPA) and directly participates in the development of FinTechs and peer-to-peer technologies in Latvia.

The most distinguishing features of Robo.cash is the AI serving to save time of investors and making the investment process easy and comfortable. It is based on the ‘peer 2 portfolio’ model meaning that one lends money not to a single individuum but invests in the portfolio of the holding that distributes assets within its group of companies specialized in PDL and Installment loans. From an investor’s point of view, it means minimum participation in the investment process and needs one to choose the preferred strategy of investments in the platform.

There are three options available. The first is to keep money at the portfolio balance serving to move funds to the investor balance where you can create a new portfolio with different settings or withdraw money to a bank account. The second is the automatic payout of invested money with received interests straight to the bank account. The third is the reinvest that is to be preferred if an investor wishes to get the most of the Robo.cash opportunities. The function serves to keep the money always at work and earn more in a shorter period of time.

Among additional features to be mentioned is the partial investment called “Invest partly” which means bundling of investments into one loan to minimize risks of each investor. A small hint: keep it turned on to take the full advantage of the platform. The function has been made optional as there are investors who prefer to be the sole owner of a loan.

The second important thing about the platform Robo.cash is 100% buyback guarantee. As the companies of the financial holding provide only short-term loans with an average due date in 18 days and the buyback coming after 30 days, an investor gets a high turnover of assets and can freely manage the money. To be considered too is one of the highest interest rates provided in the market in comparison to other P2P-lending platforms leading in the UK market - up to 14% per annum in average. Robo.cash has no secondary market.

Among the other important points about the platform is the absence of fees charged no matter whether you invest or withdraw funds. There are no extra payments for the services or an account usage, Robo.cash covers the expenses by itself. Registration for private individuals and legal entities is absolutely free of charge.

It was already said that the platform operates within the EU frameworks so it takes Euro. As for the currency conversion, it completely depends on an investor as Robo.cash provides no exchange. As for taxation, Robo.cash doesn’t withhold any taxes from an investor. Subsequently, an investor's income is a subject to tax in accordance with the legislation of his or her country. However, the platform provides investors with account statements that can be made on the website in standard or advanced forms for the chosen periods.

To sum up, the platform leaves quite a positive impression. The Robot completely fulfils its claimed functions making an investor free from boring tasks taking time. The great idea that investments can be easy, comfortable and take little time means a few simple steps to be made by an investor:

- register at the platform;

- invest funds;

- set the parameters of the portfolio;

- earn money.

And it will not even take you to open the account daily as Robo.cash has introduced mailing of daily reports recently that is quite convenient when you are away. From that point of view, despite a short period of work in the P2P-market, Robo.cash offers a rather good option to diversify a portfolio and is worthy of your attention.

Article written by Robo.cash

Funding Circle to withdraw manual lending

August 22nd, 2017
Funding Circle

Funding Circle has announced a number of significant changes which will become effective on 18th September, including withdrawing all manual lending and manual selling and a change to lending rates.

The reaction on the P2P Independent Forum has been mixed with a number of lenders highly critical, but with a similar number supportive.

Yup, this has been coming for a long time. Finally getting rid of those pesky manual lenders who actually read loan proposals and make such a fuss when loans go belly up and their money isn't returned. Much better to stick with the grateful masses who think 6% sounds fabulous and don't care (or even understand) what's going on behind the curtain.

ps. I love the way their first justification for the change is to blame bot lenders for hoovering up all the Ds and Es, thereby lowering other lenders' average returns. As if FC couldn't very easily have fixed that specific problem years ago!

Like everyone I assumed something like this was coming.  I can totally see why they would do it from their perspective, so long as the available cash doesn't dry up with people going to other platforms.

They said that 73% of new investors use autobid, but are these relatively low capitol investors?  I would have thought the people with larger totals are more likely to not be just using autobid. I assume they have thought of this though!  They might have also left auto bid on with small values, whilst they manually do large investments, skewing the "80% use autobid" thing.  Its up to them though how they run their platform.

Just as I finished optimising my selling bot too! Doh!  I might keep a weather eye on the secondary market to see if I get stuck with loan parts as there is a bloat of stuff being sold.

Contrary to everyone else on this forum, I think this is a great move.

I was previously an FC investor and bailed because it was too time consuming to manage. I moved my cash into FCIF. If people on this forum calculated their earnings / hour, I question how strong all of the returns really are.

I will now likely return as an FC investor because:

  • It's a level playing field for all investors - no more concerns that autobidders are picking up the >:D. I can fire and forget.
  • Maximum loan parts are now £100 on autobid - there was an issue before for larger investors where loan parts would get purchase in enormous chunks and therefore couldn't be sold.
  • There is no charge for liquidity - the 0.25% selling fee has been abolished.
  • FC's average return has been strong over the years and their model is somewhat proven - therefore investors can expect to achieve this return, all other things remaining equal.

I will be investing in the higher risk / return loan bucket if I do return.

Unlike others, this actually makes me more likely to use FC. i think time spent managing money on other platforms (eg Lendy, MT, AC, FS) is better rewarded than time spent on FC. So a target 7.5% with no need for much management time, no selling fees + diversification away from property, held within an IFISA, will fill a niche in my portfolio.

After all, 7.5% in an ISA is equivalent of 13.6% outside an ISA for a 45% taxpayer. And 13.6% takes some getting.

Here is a copy of the email sent to lenders:

Since we launched Funding Circle in 2010, our aim has been to enable investors to earn attractive, stable returns by lending directly to small businesses. Over the last seven years, 64,000 investors have earned more than £135 million in interest, and an average return of 6.6% per year, after fees and bad debt.

Recently, we have been reviewing how lending through Funding Circle works, with the aim of making lending simpler, better and fairer for all investors. After careful consideration, we have taken the decision to make some changes to your lending experience.

On 18th September, we will launch a significantly improved and upgraded version of our existing Autobid and Autosell lending tools, and the option to manually choose which businesses to lend to and sell will be withdrawn. This is an important change, which is why we wanted to let you know what is changing and what happens next.

How will the new lending experience work?

Investors will be able to choose one of two new lending options based on their personal preference. Both options will be available as a Funding Circle ISA, which we look forward to launching later this tax year.


Projected return of 7.5%* per year after fees and bad debt

You will automatically lend across a balanced mix of risk bands (A+ to E), aiming to achieve an attractive, stable return.


Projected return of 4.8%* per year after fees and bad debt

You will automatically lend across a balanced mix of risk bands (A+ to E), aiming to achieve an attractive, stable return.

Your actual return may be higher or lower, and by lending to businesses your capital is at risk.

As part of the improvements we are making we are also updating the interest rates at which you lend to businesses. The projected return of both lending options have taken these changes into account. You can read more about the new interest rates, which we'll be introducing on 30th August, here.

This improved lending experience will also deliver:

  • A better way to match your funds with businesses
    Loan parts will now be matched based on your current projected return and the amount of available funds in your account. This means the projected return for your own portfolio should more accurately mirror the overall portfolio return of your preferred lending option. In addition, loans will now fund faster, further reducing the time money sits in your account earning no interest.
  • The best chance of earning a stable return
    No more than 0.5% (subject to a min of £20 per business) of your portfolio will be lent to a single business, helping you to manage risk effectively.
  • An easier way for investors with larger accounts to sell loan parts
    New loan parts will be no larger than £100, even if you lend a higher total amount to a single business. For example, an investor lending £100,000 would lend £500 to each business (0.5% of their portfolio). Each £500 will now be split into £100 parts, making it easier to sell them to other investors.

As well as improving the process for lending, we are also making improvements to how investors access their money via our Autosell feature. This will mean:

  • A simpler selling process
    Just tell us how much you’d like to withdraw and you can sell a selection of your loan parts directly to other investors. The option to sell individual loan parts and set a premium or discount will be removed.
  • No more sale fees
    From today, we are becoming the first major lending platform to charge no fees for selling your loans.

These changes will make lending simpler and better, creating a level playing field for all investors and ensuring you have the same opportunity to lend to UK businesses.

Why are we withdrawing manual lending?

We launched Funding Circle in 2010 with the option for investors to either manually choose which businesses to lend to, or use our Autobid tool to build a portfolio based on their lending preferences. Whilst we know many investors have enjoyed manually choosing loans, there are some drawbacks to it:

  • Many investors do not currently benefit from lending to all types of businesses
    Currently some investors can find it difficult to access D and E loans, which are some of the most popular. We want to ensure investors lending through Funding Circle have an equal chance of accessing all loans, and earn the best possible return.
  • It can mean your lending is not spread evenly across lots of businesses
    Currently many investors who manually choose loans are not fully diversified and are at risk of having a negative lending experience. We want to ensure investors spread their lending across lots of different businesses as this is the best way to earn a stable return.
  • It can be confusing for investors
    Many investors tell us they prefer a simpler, easy-to-use lending experience: 73% of new investors who join Funding Circle choose Autobid, and 80% of Funding Circle investors** say simplicity of lending is important to them.

What happens next?

On 18th September we will automatically transition you over to the Balanced lending option. This means you do not have to do anything and you will automatically start lending to businesses on this date.

If you don't want to move over, you can pause your lending by logging into your Funding Circle account and turning Autobid off. This will stop you from lending to businesses on 18th September. You can change your lending option by navigating to the Autobid page and following the link.

These changes will only affect new lending and selling from the 18th September. After this date you will only be able to select one lending option at any one time.

As part of this change we will also be updating our Terms and Conditions. You can view a summary of the main changes here.

How do I provide feedback?

We appreciate this is a significant change to how lending through Funding Circle works. We want to hear your thoughts, so you can provide us with your feedback by visiting our announcement webpage.

You can find more information about your new lending experience in our FAQ.

We hope this provides you with the information you need about this important decision. This is a big change but the right one to provide all investors with a simple and stable investment experience. We look forward to answering any questions you have.

P2P money blog wins an award

July 19th, 2017

The P2P money website blog has been awarded one of the Top 100 P2P Lending Blogs on the web.

Anuj Agarwal, founder of Feedspot, wrote "I personally give you a high-five and want to thank you for your contribution to this world. This is the most comprehensive list of Top 100 P2P Lending Blogs on the internet and I’m honored to have you as part of this!"

Ian Gurney, founder of P2P money, stated "This is a great achievement to be recognised as one of the Top 100 P2P Lending Blogs given our focus on the UK market".

Fallout from RateSetter wholesale lending

July 19th, 2017

 RateSetter has emailed all of their lenders concerning three borrowers.  We have redacted some of this information for confidentiality.

On 2 May 2017, we announced on our blog that we had changed our relationship with two of our borrowers.  We are writing to you today with more information about this and to let you know why RateSetter has intervened over and above the usual course of business with three of its borrowers.

Why is RateSetter providing this information?

We believe it is important for all our lenders to be comfortable with their investment and aware of the risks of investing with RateSetter on an ongoing basis. If you feel this information changes your investment, we are giving you the option to review your investment with us and sell out without incurring any fees. This offer is available to you for the next month.

RateSetter has intervened directly with three borrowers as follows.

  • V****** T****** Group Limited, a motor finance holding company: this company went into administration because it had taken on too much debt.  RateSetter bought the two operating subsidiaries in order to best protect our lenders’ interests.  They are Vehicle Credit Limited (which makes loans to consumers to buy cars) and Vehicle Stocking Limited (which makes loans to motor dealerships to buy cars).  We intend to expand our motor finance lending capabilities by integrating the two businesses into RateSetter product lines, with lenders matched directly to the end borrowers.  The businesses are repaying their existing wholesale loans of £24m (VCL) and £12m (VSL) as their end borrowers repay in line with the loan schedules.  The loans are secured on the underlying loan portfolios of these two businesses which total £31m.  These portfolios are expected to generate sufficient interest throughout their lifetime to repay these wholesale loans in full.
  • A**** Limited, an advertising company:  In 2015, V****** T****** Group used £12m of wholesale lending from RateSetter to lend to A**** Limited.  A**** was poorly managed and got into financial difficulty.  As lending this amount to a single business was outside RateSetter’s credit policy and was an exceptional case, we believed it was right for RateSetter as a company to intervene and absorb any losses from this loan, as opposed to the Provision Fund doing so.  RateSetter is doing this by standing behind A****’s monthly loan repayments until the money is fully repaid.  The amount outstanding is now £8.5m. A**** is now fully owned by RateSetter.
  • G***** B**** Limited, a consumer guarantor loan specialist:  RateSetter obtained a minority equity share of this business, with the intention of changing the wholesale lending arrangement into one where RateSetter investors would lend directly to G***** B**** borrowers.  However, after further examination, we concluded that we would not continue with this strategy.  RateSetter will remain a supportive but passive shareholder in the business.  G***** B**** is repaying its existing loans of £32m as its end borrowers repay in line with the loan schedules.

These three interventions all stem from RateSetter’s wholesale lending which we discontinued in December 2016 and we do not intend to intervene like this again.  The expected default rate on RateSetter’s outstanding lending is unaffected and stands at 2.9 per cent, and currently we estimate that the Provision Fund is large enough to cover all Expected Future Losses.

The option to review your investment with a free sell-out

We are giving everyone, not just the lenders who are matched to these specific borrowers, the opportunity to review their investment, as all investors are exposed to the performance of the loan book as a whole.  The Provision Fund effectively spreads each lender’s risk across the whole loan book, you are exposed to the performance of the book as a whole - not that loan specifically.

If you would like to sell out of your investment with RateSetter without incurring a fee, please email us.  This offer will last for one month, from 18th July to 17th August 2017.  We would like to point out that sell-outs are always subject to there being other funds in the market to replace funds withdrawing from loan contracts.

RateSetter did have to because if they didn't the Provision Fund would have been able to cover this, but this would leave it so depleated that it would be unable to cover other expected defaults.  The reaction on the P2P Independent Forum was of some concern, with some lenders expressing their wish to exit the market, but given the current oversupply, this could simply restore some of the balance between lenders and borrowers.