Zopa Returns – August 2009
I posted a graph and explanation of this a few weeks ago.
So have things changed?
Zopa Returns - August 2009
There are various lines shown on the graph.
- Red shows the A* lending rate
- Blue (Earn1) shows the returns discounting for any bad debt, but including accounts in arrears.
- Orange (Earn2) shows the returns discounting for any bad debt and arrears.
- Dark Blue at the bottom, is the OBR or Official Bank Rate
Notes.
- Earn2 is creeping back up towards Earn1. I think this is because after initial hiccups accounts tend to settle down. I also think that Zopa have tightened their lending conditions, which may mean they get less hiccups.
- Earn1 seems to have a sawtooth pattern. This is because, most contracts are from the 25th or one month to the 3rd of the next. At least the monthly peak rate seems to be rising.
- At present the Inland Revenue does not think that bad debts are allowable against tax. Many disagree and my accountant has said that he believes they will be allowed. After all do they want a big fight over £200?
I’m still happy.
Clouds on the Zopa Horizon?
I’ve now got over £30,000 invested in Zopa.
Nothing really untoward has been happening with my money and according to the latest figures, I’m earning a genuine five percent on my money. By a genuine five percent, I mean one that includes all the charges and bad debts. It also takes into account money that is in Zopa, but is not been lent out yet.
Of the 650 or so people I have lent to, only three are in trouble, with one a genuine bad debt and the other two limping along still making payments. That level is below the level forecast by the company and well below the levels experienced by the average finance company.
The graph below shows the rates at which money has been lent out on Zopa.
Zopa Rates to August 2009
Note that since mid-April rates have been rising, but over the last month or so, they have flattened off a bit and they may even have been falling slightly.
The graph below shows the amount of money requested.
Money Requested on Zopa - August 2009
Note how over the last six weeks, the amount of money requested by borrowers has dropped significantly.
Is this and the drop in interest rates linked to the banks being easier places to borrow money or does it reflect a typical lack of business because of the summer holidays? You could argue that the peak in June/July was caused by people borrowing money for holidays or new transport to take them there!
So there could be some fluffy cumulus on the Zopa horizon. We’ll see if business takes off in the autumn.
But a bigger thundery cloud has been seen courtesy of the Office of Fair Trading.
When I first got the letter saying that I must register because of Anti-Money Laundering Regulations, I thought it was a joke or at worst a try-on. Basically, reading the letter it just seems to be a catch-all to raise more money for this beleaguered government.
Why should I pay £115 a year, when my lending is controlled by Zopa and I only transfer money into them, by a straight transfer from my bank account? It is a yearly charge and would cut my rate from five to 4.7 percent.
If every lender on Zopa had to pay this tax, then it would not be the place for lesser mortals to get a decent rate on their money. But then Prudence and his ilk, have never liked private enterprise. Unless of course it benefits themselves!
It could be argued that Zopa is also a competitor to the various State Banks, that Prudence has saddled us with.
But despite all these clouds I will still be putting a percentage of my spare money into Zopa in the future.
Credit Card Security – A Picture?
On Tuesday, I wrote about another credit card scam.
It strikes me that the Internet has moved on with things like Twitter, Facebook and all of the other social media. But institutions like banks seem to be very much stuck in the last century when it comes to embracing, not the social media, but the technology that drives it.
For instance, go into your average shop, supermarket or garage, the till is unlikely to be something archaic, but a computer with a screen, masquerading as a sophisticated money-taking terminal. So when I put my credit card in the card reader, this computer can do, and I hope it does, a lot more than just check the pin code.
As an example, we should be able to upload other data to our card account. For instance, suppose I uploaded the registration of my vehicles to the bank. Then in a garage, I could choose that these were displayed to the operator, so that if I was not in a named vehicle, he could check the card further. I think that only once in the last five years, have I filled up with fuel, without knowing the vehicle number. And that was when I collected a new horse box from Newbury.
But other things could be done. Why can’t I upload a picture to my credit card company, that is then used on my card? I’d probably put one of the Lotus. So if my card was cloned and suspicions raised, then it would be easy to check that it wasn’t the correct card. Perhaps, a description but not the picture could be downloaded to the terminal. After all if this said “yellow Lotus Elan” and it was a plain red card, this should ring a few bells.
But we could also upload a personal photo, that we gave permission to be downloaded when we used our card. It would probably only mean that if a few percent of cards had a picture on them, then criminals would be wary of using all cards in shops and garages. I suppose they could check that a card was picture enabled, but that would mean that they would have to do a purchase in a dodgy retailer, thus leaving a trail.
I also wonder too, why you can’t have SMS messages enabled on your card or bank balance. Say once a day, you get a balance and you are informed of every transaction over a preset limit. I can look all this up on the Internet, but it would not be difficult terchnology to impliment and I’d pay a few pence for the messages.
This are only a few of my thoughts.
But we have to ask, why banks and credit card companies are not thinking much more like the general population.
After all, according to many sources, bank and credit card fraud is going to get much worse. I also don’t believe that they can beat it on their own and they need all the help they can get. And especially from those with most to lose; their customers.
Zopa’s 300,000th Member
In their July Newsletter, Zopa has said this.
In the last week, we also recruited our 300,000th member – meaning that we’re now officially bigger than Belfast!
That’s a lot of members. It would be interesting to know how many have actually lent or borrowed.
But that figure does illustrate how many people now know about the concept.
Is it Usury?
I was rather surprised that Provident Financial, who reported good results this week, charge some of its customers an interest rate of up to 545% on loans. Martin Narey of Barnardos is not amused. And neither am I!
But to criticise the company is wrong, as they are merely filling a gap in the financial services market, that should be catered for by micro-finance companies and credit unions. As to the latter it has always puzzled me why they have such a low profile in this country, compared to the United States. They seem to be ideal for the times and also for lending small amounts of money in more stretched communities. Especially, as any profits stay in that community.
Could it be that the regulations are framed to protect the banks? After all, no credit union has ever taken the Chancellor of the Exchequer to the British Grand Prix or other major sporting event. And they probably don’t pay anything to the government, except perhaps VAT and Income Tax for employees.
At least though, the spam I used to get from doorstep lenders like Providential has stopped. (They didn’t send any incidentally! Or not to me at any rate!) This offered me loans at high rate and it came from spam companies in the United States. However, a letter to my MP, who talked to the government, stopped the process in days.
There’s another moral in that tale. Don’t underestimate the power of your MP! If you have a problem write to them!
BigZopa.com
I’m convinced that Zopa is working. I get a good return and judging by the number of people who apply for loans who have good credit ratings, it provides a service for discriminating people who need to borrow money. I tend to think that anybody can lend money to those with bad credit ratings.
At present Zopa has a borrowing limit of £15,000, but what if you created BigZopa.com and had a limit of £1,000,000. You would obviously need a lot more money to be paid in, but it would be an interesting place to put corporate money.
The economies of scale would mean that the system would cost about the same to run as the current system. But it would obviously cost a lot more for the due diligence.
But BigZopa.com will come.
Incidentally, BigZopa.com is available to register. Try Low Cost Names.
Goat Finds God
Lord Myners is discussed in this article, titled “Lord Myners attacks bankers’ greed and finds God” in the Sunday Times. The opening paragraph says it all.
Lord Myners, the minister appointed to clean up the City, is so disenchanted by bankers’ greed and self-aggrandisement that he is planning to become a theology student.
He is one of Gordon Brown’s “Government of all the talents” and was Financial Services Secretary. It’s alright for this goat to find god, as he has already amassed a fortune of about £30 million.
I’m no fan of bankers, but by increasing the top rate of tax in the UK, Gordon Brown is actually playing into their and the smart lawyers’ hands. I sold two technology companies in the seventies and eighties, when top tax rates were at eighty percent and the lawyers had a field day and made large amounts of money, so that my hard earned money didn’t go to government schemes of which I do not approve. So we’ll see increased profits for lawyers and bankers again.
A few collective nouns sum up professionals.
- An anarchy of computer programmers
- A wunch of bankers
- A delay of solicitors
- A self-interest of politicians
Feel free to add some more.
An Expensive Smoke
If there’s anything that might make someone give up smoking, then it is a mistake like this.
I bet his heart fluttered a bit.
Another Case of Rip-Off Britain
I’ve just booked my return trip on Norfolk Line.
Can anybody tell me why I get charged for credit cards when booking Dover-Dunkirk and I don’t when I go from Dunkirk to Dover?
Sounds like some banking practice in the UK, which rips me off!
Zopa Demand Increases
I keep track of the amount of money that is requested on Zopa.
Over the last few months it has risen substantially, as on April 1, 2009 it was £3.5 million and now as I write on the 14th July it is hovering around the £10 million mark. In other words demand has increased three times in three and a half months.
Incidentally, interest rates have firmed up in that period and started rising towards the end of April.
I still only have the one bad debt and accounts in arrears are about the same they were in April.
This means that my return is still at present just over five percent. But that includes all the money tied up in Zopa and not just that lent out.
The Anonymous Widower 