Accessing Capital?, Lender question Options

[Guest_rudipickup_*]

Hi,

I have a question which I can't seem to find the answer to on the main site. How can the capital be accessed when you are a lender? I am thinking of switching savings accounts and am interested in Zopa, but would like to know if the funds are accessible before doing so.

Many thanks in advance,

Rudi

[elljay]

Hi Rudi, you can get your money back any time if it hasn't been lent out, but once it's lent out it's tied up until the borrower pays it back. There's a faq here: link

HTH

elljay

[m1chaels]

I have suggested on many occiasions that zopa set up a secondary market so lenders can 'get out' should circumstances change, for example by auctioning existing loans but Zopa have never taken this forward, not sure if it is because of the legal structure of the loans? In my opinion it would attract a lot more funds to zopa if a way to withdraw funds was made available.

[elljay]

I think a secondary market is one of the many things on Zopa's list. Not much word from Dave these days - I wonder if Zopa are concentrating on launching in America...

[zopa_tom]

Secondary market is still very much on our to-do list, as would be a huge win for Zopa.

As M1chaels rightly says, the legal issues around it are complex so we're looking for a way round these before embarking on what would be a huge build.

But it's clear the demand is there for it, so is something we're very, very keen on.

Elljay - the American launch is a biggie for Zopa, obviously, but we've got a specific US team who are working on that so the UK team can concentrate fully on the UK site/business. The US launch won't impact on the Brit side of things, and nor would we ever let it - honest guv'nor!

[elljay]

Good to hear that Tom. Impressed that you and Sid both seem to be working on a Bank Holiday Sunday. Any chance of a heads up on what the UK team are working on? Realise that priorities change but it'd be nice to know what exciting things you're planning next.

[Shiggaddi]

The secondary market would also help with the SIPP pension scheme, as many people might want to transfer in from a previous provider, and have quite alot to spare initially, but don't want to commit as much as £500 to each borrower in order to get it all lent out quickly, or have lots of money earning 4%

The simplest way to manage this market, is the new lender pays the capital that is outstanding to the old lender, and takes over receiving the interest payments, however some people would have built up a portfolio across all markets, and a new lender might not be interested in either the low returns of the A* market, or the higher risk of the C market, so someone selling a portfolio of loans could end up transferring to several new lenders. Also, a lender might not want to release all their money, so might only sell some of their loan book.

Perhaps the Zopa team could arrange a chat room meeting, like they done for something else a while back, and ask our views on ideas on what should and shouldn't happen with a secondary market.

[zopa_tom]

Good to hear that Tom. Impressed that you and Sid both seem to be working on a Bank Holiday Sunday. Any chance of a heads up on what the UK team are working on? Realise that priorities change but it'd be nice to know what exciting things you're planning next.

Funny you should say that because Justin and I were discussing the other day the possibility of putting the development plan online so everyone could look at it. There are obviously big business decisions around this (with more and more 'rival' sites emerging), and also expectation issues (don't want to annoy people if we say we're going to do something then it gets bumped down the pecking order) but I'm going to bring it up at the next team meeting and see what the rest of the team think of the pros and cons.

In terms of what we're working on at the minute, there's an absolute shed-load. Monthly newsletter is due out this week and everything will be outlined there for you.

[zopa_tom]

Perhaps the Zopa team could arrange a chat room meeting, like they done for something else a while back, and ask our views on ideas on what should and shouldn't happen with a secondary market.

I think we'd definitely do this once the legal issues have been sorted and we've got the green light to proceed.

[elljay]

Funny you should say that because Justin and I were discussing the other day the possibility of putting the development plan online so everyone could look at it. There are obviously big business decisions around this (with more and more 'rival' sites emerging), and also expectation issues (don't want to annoy people if we say we're going to do something then it gets bumped down the pecking order)

Ideal. Maybe a list without dates and a flashing red "not set in stone" at the top

In terms of what we're working on at the minute, there's an absolute shed-load. Monthly newsletter is due out this week and everything will be outlined there for you.

Excellent, looking forward to it already.

[Shiggaddi]

I think we'd definitely do this once the legal issues have been sorted and we've got the green light to proceed.

Since I'm the person to suggest it, please can we have an afternoon session, instead of a morning one, as I work nights, and sleep in the morning.

[zopa_tom]

Since I'm the person to suggest it, please can we have an afternoon session, instead of a morning one, as I work nights, and sleep in the morning.

I don't see why not! Won't be happening in the near future, but when it does we'll make it an afternoon thing.

[elljay]

Funny you should say that because Justin and I were discussing the other day the possibility of putting the development plan online so everyone could look at it. There are obviously big business decisions around this (with more and more 'rival' sites emerging), and also expectation issues (don't want to annoy people if we say we're going to do something then it gets bumped down the pecking order) but I'm going to bring it up at the next team meeting and see what the rest of the team think of the pros and cons.

Did you guys have a team meeting as yet? Any update for us on your plans?

Thanks

[chancer]

Obviously some developments need to be confidential, but most of them don't, and it is highly desirable for members to be able to see which bugs and feature requests you are working on and which you are not.

For instance, when will My Statement be fixed to include fully repaid loans?
When will 'in processing' be broken out?
When will referrals be visible?
When will auto-relending by made more flexible?
When will offers with zero funds stop disappearing?
When will 'my borrowers' tie to 'offers to borrowers'?
When will 'my borrowers' tie to the figure for 'lent out'?
When will defaults in 'my lending offers' actually report defaults rather then payments due on Sundays?


If you can't disclose that you are working on these bugs, we have to assume you are not.


Zopa's communication with members has reached a new low. Last week we were promised a post by the CEO in response to lender concerns. It didn't happen, and Linda posted instead. No disrespect to Linda, but we want to know that the main man is on the case.

Linda said (on Monday) "We'll advise you on this board, what we will fix by when as soon as possible and then let you know when it's fixed."

Another week gone and we have not been told the what or the when. "As soon as possible" should mean within a couple of days, or do you still not know what is broken?


I can't decide which is worse - that you know what is broken but can't be bothered to tell the community, or you still don't know

[elljay]

Good summary. I've just written to James to express my feelings on this; late payers and communication from Zopa in general.

[zopa_tom]

Hi everyone - I've been off for the last few days so sorry for lack of posts. In response to your post chancer....

Obviously some developments need to be confidential, but most of them don't, and it is highly desirable for members to be able to see which bugs and feature requests you are working on and which you are not.

Entirely agree. We are currently discussing the possibility of putting our dev plan online and better communicating what we're working on.

If you can't disclose that you are working on these bugs, we have to assume you are not.

Entirely agree. That's why we're looking at the best ways to let you know what we're working on.

Last week we were promised a post by the CEO in response to lender concerns. It didn't happen, and Linda posted instead. No disrespect to Linda, but we want to know that the main man is on the case.

He is on the case, and he will be posting on here later today. Zopa is a small office, and you can rest assured James knows exactly what's going on because Linda and I tell him every 5 minutes. Linda is particularly good at this....(!)

[James]

Hi there all

Firstly and apology for not being more active on the Boards. I will endeavour to be more so. (fyi - I asked Linda to post on my behalf last monday because I was unable to)

Secondly - I hear you loud and clear that our communication is not good enough. We will therefore have to improve it.

Thirdly - I am more than well aware of the conversations on the Boards. I am kept well informed and these influence and inform the priorities of our development pipeline.

We are doing our damnedest to be responsive - both in terms of our communication and in terms of improving the product. How many other companies, let alone banks, have transparent bulletin boards? Imagine if LLoyds added one! I know that you'll also understand that we only have limited resource - people, time, money.

Please dont hear this as an excuse - its not - its just that things can, individually or cumulatively, take time to implement. So please keep the suggestions coming - please understand that we cant make all changes immediately - and please be aware that there will always be different views on priorities. Its my job to ultimately make the right choice.

You may also be interested to know that Tanya Cordrey, the former Product Director at eBay UK has recently joined us. Her role is to improve the Product for you our members. She will bring new and valuable experience to the team.

Trust me that we want Zopa to be brilliant just as much as you do.

I am always available should anyone want to talk in more detail - just send me an email to james@zopa.com.

Many thanks

James

ps - I think the suggestion to post the development plan is a really good one and we'll put this up next week

[bigfoot12]

I would love to see some sort of secondary market. I really think it would improve liquidity, especially in the 36 month plus. I agree it would be a lot of work for Zopa as it would have to be sophisticated from the start as it would have to deal with:-
a power seller selling a £500 or £3000 loan that would need to be split between multiple bidders;
bidders who already own loans from a borrower being sold and not wanting to increase their exposure;
simple ways of selecting all or part of a portfolio (say all loans with 24+ months outstanding);
loans were there have been some late payments must be in a seperate marketplace(might suggest a borrower struggling to repay) or we end up with the George Akerlof 'Market for Lemons' type problem;
loans were there has been an early repayment of part of the loan (might indicate further chance of further early redemption) Akerlof again;

None of these is a huge problem but the full package which also makes it easy to specify what a bidder is hoping to buy. Remember an investor with a sipp might be investing £10,000 (or much more) and so want to buy 200-500 seperate loans without having to check the details of each borrower.

Oh yes and we have to worry about capital gains tax.

[Shiggaddi]

I would love to see some sort of secondary market. I really think it would improve liquidity, especially in the 36 month plus. I agree it would be a lot of work for Zopa as it would have to be sophisticated from the start as it would have to deal with:-
a power seller selling a £500 or £3000 loan that would need to be split between multiple bidders;
bidders who already own loans from a borrower being sold and not wanting to increase their exposure;
simple ways of selecting all or part of a portfolio (say all loans with 24+ months outstanding);
loans were there have been some late payments must be in a seperate marketplace(might suggest a borrower struggling to repay) or we end up with the George Akerlof 'Market for Lemons' type problem;
loans were there has been an early repayment of part of the loan (might indicate further chance of further early redemption) Akerlof again;

None of these is a huge problem but the full package which also makes it easy to specify what a bidder is hoping to buy. Remember an investor with a sipp might be investing £10,000 (or much more) and so want to buy 200-500 seperate loans without having to check the details of each borrower.

Oh yes and we have to worry about capital gains tax.

I still think my idea of a simple transfer of the capital lent out being bought by the new buyer. The new buyer simply pays the capital that is being lent out, and receives the future interest payments.

[bigfoot12]

I still think my idea of a simple transfer of the capital lent out being bought by the new buyer. The new buyer simply pays the capital that is being lent out, and receives the future interest payments.

I agree that keeping things as simple as possible is always the best starting point, but these are fixed rate loans and rates change.

For example let's say I lend out some money in the A*36 market at an average rate of 5.75%. Now imagine oil continues to go up and also natural gas increases sharply in price. I don't think this is likely in the next couple of years but it has happened in the past (and so a market place would have to deal with it). In order to keep inflation on target the Bank of England would have to put up interest rates. So in my extreme example in one year's time rates are now 8%.

I now want to sell my loan. You want to buy it. But you can get 8.1% in the A*24 market so you aren't going to want my loan are you? Unless you can buy the outstanding capital for a discount.