Giles Andrews On Zopa
I found this article on Wired, which is an interview of Giles Andrews, the CEO of Zopa; the peer-to-peer lender.
Read it, remember the salient points and if you don’t swallow the message about the banks, you don’t deserve to have your savings protected. Take this statement from Giles.
A lot of banking is in a black box and consumers don’t really know what happens. Give your money to Barclays, in a savings account, and god knows that happens to it. Is it going half way round the world to buy some weird book of securities, or is it being lent to a small business in Sheffield?
A lot of people put their money in the Co-operative Bank because of reasons like this.
Peer-to-Peer Lending In The Times
There is a good review of peer-to-peer lending in The Times today. One of the most significant things of the piece is that Google has taken a small stake in Lending club. There’s more on the Google deal here.
The banks might not like it, but the writing is on the wall.
Today, I’ve started to move my working deposit account to Zopa.
I’m Closing My Funding Circle Account
For similar reasons to why, I’m closing my Ratesetter account, I’ve decided to close my Funding Circle account.
Unfortunately, I’ve found it impossible to login, so I e-mailed them this.
Please can you close my account and return any monies to me.
Unfortiunately, I can’t login, as I’ve forgotten my password and I can’t answer the questions correctly to reset it. When I registered, I couldn’t answer the question about who my best friend at school was, as I didn’t have one.
It actually, is true, but I didn’t really have a best friend at my school, as my best friend, who lived a few doors away, went to a boarding school.
I’m Closing My Rate Setter Account
I have just sent this e-mail to Rate Setter.
I’ve never really got into Ratesetter, so I’d like to close everything down, or at least withdraw the money that has not been lent.
It’s just that the concept of the site requires a lot of managing and as Zopa now has their Safeguard product, which gives me a reasonable rate and quite a bit of security, I might just as well have the use of the money or give it to charity.
The Personal Touch From Sir Mervyn
This story reported on the BBC, is a good one, as it shows the tensions between the Bank of England and the so-called retail banks well. The guy who wanted to buy a van, sums up the banks as follows.
But Mike Benson is unimpressed, and is thinking of turning to other lending schemes which do not involve banks, like peer-to-peer lenders.
“There will come a point when we don’t need the banks. And sayonara to the banks!”
That is why he eventually decided to buy his van with his own cash.
I wonder if any of the peer-to-peer lenders have contacted him or as they tend to be low profile, he’s contacted any himself!
Sir Mervyn’s letter may be typical of the Bank of England. I once wrote to another director, who was writing a report on a particular subject. Not only did he reply, but he put some of my thoughts in the report and when it was published I received a copy, which acknowledged my contribution in an Appendix, along with all the others who’d done so.
Would you have got that response from Lloyds, Barclays or RBS?
The ISA Rip-Off
It’s the cash ISA time of the year and I’ve just been looking at the rates. As to what an ISA is, it’s probably best summed up by this page in Money Saving Expert. Here’s the first paragraph.
A cash ISA is just a tax-free savings account. You don’t need to lock the cash away, many are easy-access. Each tax year EVERY person over 16 in the UK can put a new £5,640 in these accounts that pay up to 2.8%. And once in there, the money stays tax-free, year after year.
The rates are derisory and are very poor compared to what I get from Zopa.
Admittedly, there are tax advantages, but why can’t I get those with a peer-to-peer lender if I agree to lock my money away for several years?
An Overview Of Peer-To-Peer Lending
I just found this excellent article about peer-to-peer lending in the Northern Echo.
Peer-to-Peer Lending In Estonia
My Zopa alert found this article from a website called European Voice.
It gives this view on Estonian banking.
Banking is the economy’s biggest weakness. It offers stingy, fee-ridden savings products and over-priced loans with nasty hidden costs. Intermediaries gain colossal profits, especially when they are greedy and reckless. When things go wrong, as they inevitably do, the taxpayer picks up the bill. Apart from that, it works fine.
It then goes on to show how things are changing through a company called Isepankur.
The writer has in fact invested some of his savings, by loaning to Estonian borrowers. This is his experience so far.
My net average return (like most Isepankur lenders) is about 17%. I have so far lent €1,570 to about 50 borrowers, in amounts ranging from €5 to €25. I have received €60 back in repaid capital and €24 in interest. I also got €0.06 in ‘penalties’ (my share in a small fine levied on a borrower called ‘Lillekas’ who paid a few days late).
I don’t think it will be many years, before the peer-to-peer lenders are available in many countries.
Who’d be a retail banker?
The Zopans
In my previous post, I used the term Zopans to describe those working on processing the loans at Zopa.
It conjures up images of dark figures in a subterranean hell forging iron with immense powerful machines. Some of these images go a bit over the top!
I think though it illustrates how the choice of a company name is important!
The Zopans Are At Work
There has been activity on my Zopa account this morning, with £150 credited from repayments and a couple of outstanding loan offers have been approved.
I suspect that a lot of these actions are just clever software, but some might have needed an OK from someone with a face and a brain!
Four loan offers have also appeared on my account with today’s date. So there are definitely people out there, who need a loan on most days in the year. My two loan offers on Christmas Day are still being processed.
Incidentally, looking at my loan book, I have a loan that was started on Christmas Day 2010.
The Anonymous Widower 