FC not carrying out due diligence? -Expansion & Growth 23911

I seemed to have dodged this particular bullet. What was the loan number?

It is perhaps even more annoying for the whole loan lender who picked up loan 43239 to the same company, which was taken out in September, after the change of director but before CH were notified. 

I don't really agree with the above comment (Oh adrian77, what happened to our love?). FC have a more than five year record of returning in a range of 6 - 7% net of everything, to all but the most unlucky investors.

However they still have their share of loans which borrow and pay one to three installments of their five year loans before collapsing into administration, which does indeed look like FC overlooked something important. But it has always been this way, right from the start. I seems to me that about the same amount of loans collapse this way as they did years ago, meaning that FC never improved, or that there is a way of hiding facts about your company when taking out a loan which no improvement will stop. Which is it?

In the past, in these cases such as 'Breath of Foul Air', a first hurdle faller of yore, as an investor one used to feel that one shared a little bit of the responsibility, having made the decision to buy a part of the loan. These days we feel force fed these poison pills, having had no say in the choice.  I am also at this moment massively peeved about being awarded a £100 lump of rubbish in a different loan which was downgraded immediately and all the directors bar one resigned as soon as the cheque cleared. The feeling of powerlessness over investments made on our behalf is also driving me away from FC.

It's the classic false positive vs false negative problem. FC could do more to prevent bad borrowers getting through, but it would likely result in rejecting more of the good loans and result in increased fees to pay for the additional DD, neither of which is good for FC's business. Far easier to get early failures to as low as reasonably practicable, then price the rates good borrowers pay so as to achieve reasonable overall yield.

Human nature is to be loss averse, and we tend to take losses from dodgy borrowers personally, even though a well diversified lender is almost certainly earning a positive return, and most lenders will be earning at least the target return. 

FC have likely improved their processes, but they are in an arms race, as their fraud detection improves, the dodgy borrowers invent new ways to circumvent them. Bear in mind FC have also introduced higher risk bands, with corresponding higher rates, since the early days.

When I first read that, I thought you meant Assetz, but on second thoughts I take it you mean white rose rather than red.

No not Assetz (I am with them) but yes definitely a white rose company although not a very big one!

no comment !