Our latest blogpost on collection process received a lot of attention. We gathered together the most hot comments and highlighted the answers in a separate post.

  1. Why is the success fee % so high in Estonia?

In Estonia we are testing 4 DCAs to understand if higher collection fees offered by some of them will result in higher recovery. However, all of the DCAs will be evaluated based on the net payout (amount collected less the fees).

  1. How will Bondora handle overdue on auxiliary claims such as borrower failed to pay the management fee? If there is a recovery coming in how will this amount be distributed between Bondora and the investors?

The recovered amount is distributed in the following order: a) principal, b) management fee, c) interest. Thus, we will collect the management fee only in case the full amount of principal is fully recovered.

  1. How will Bondora keep the investors updated on the progress of recovery?

Investors can use the “Recovery Statistics” report to track the performance of the DCAs. Thus, all loans passed to the DCAs will stay under Stage 1, and in case DCAs are not successful and we turn to court, the status will change to the Stage 2.

  1. Can you please briefly compare the new process to the previous model?

The difference to the previous process is that after 90 days of non-payment we attempt to collect using DCAs, while previously we turned to courts right away. We will involve up to two DCAs and each of them are given 90 days to collect (DCA #1: days 90 – 180, DCA #2: days 180 – 270). In case none of them collect the due amount, we turn to court.

The reasoning behind the change is that we expect higher net collection by involving DCAs before engaging in a lengthy and irreversible process of collecting through courts.

  1. Why the collection process cost are not paid by the borrower?

Passing the collection costs is either already prohibited or will be prohibited soon by the regulators. The regulator in this case sides with borrowers to protect them from aggressive practices used by some lenders.

  1. Will you guarantee that all principal will be paid back (if the DCA collects enough) and there are no fees until all principal is paid back?

The agency is paid a success fee based on the collected amount, and all net proceeds (collected amount less the agency fee) are first used to repay the principal until either a) the principal is repaid in full or b) the borrower settled the claim.

  1. Is Bondora going to adjust its management fees downward to account for reduction in its costs?

We have considerably lowered our management fee recently (August) to make Bondora loans more affordable to the borrowers. At the same time we have kept the interest rates to Investors intact.

  1. Are there any loan recovery statistics?

You can see the “Recovery Statistics” report for your portfolio under “My Investments” -> “Statistics”, or you can use the Loan Dataset if you want to get a more detailed overview.


47 responses to “Follow-up on the Collection Process overview”

  1. How will this new collection process affect the returns? Do you have any estimates? Are we expected to receive less but faster, or the same as when using the courts?

    In the statistics page I believe that the expected return per risk class is calculated assuming a certain recovery rate. I would like to now what are the recovery rates used to calculate the expected returns per risk class on the statistics webpage, and how do you calculate them.

    • Thanks for the reply.
      I have a few more questions:
      How often do you update the expected loss for each loan?
      What are the the losses given default for each risk category? And how have this values changed in the last year?

      I would find it useful if the statistics page showed the the expected default rate and the expected loss given default as well.

      Besides you also have a graph comparing the actual recovery to the expected values. But it would be helpful to know how much the expected recovery really is.

      i think this would would make the statics page more transparent to investors.

    • Hi George,
      Thank you for your questions, we will get back to you asap with replies.

    • Hello Tatjana!
      today at: Tatjana Skvortsova
      October 13, 2015 at 15:34 you promis: “…we will get back to you asap with replies”

      but after u post 3 different users 1 answer:

      Tatjana Skvortsova
      October 13, 2015 at 16:18
      Hi George

      Tatjana Skvortsova
      October 13, 2015 at 16:20
      Hi,

      Tatjana Skvortsova
      October 13, 2015 at 16:21
      Pellen,

      We value a good dialogue with our customers and that is also one of the reasons to
      have an open commenting available here in the blog. Our aim is and always have been to have the investors best interest in mind by offering them the highest return on investment in the market. We strongly believe that the process currently in use serves this value and we already see the positive effect on our other markets. This similar process is also used by others in the P2P industry and so far it has proven a positive effect on the investors returns. We hope that soon enough you will see the effect from your portfolio.

      “We value a good dialogue with our customers…”
      If i want a good dialogue i buy a beer and drink it with my friends!
      I need answers!

      “Our aim is and always…”
      Your “aim” from my pocket! (DCA fees you want pay from MY MONEY! without my accept!)

      “We strongly believe that the process…”
      one man told me: we talking about the MONEY if u believe go to the Church!

      “This similar process is also used by others in the P2P industry”
      You offer to Bondora investors use “others in the P2P industry”???

      the Morca and I and many others NEVER use Bondora for investing ouer money!

      But you don answer my questions abiut that post:

      George
      October 13, 2015 at 15:26

      JamesFrance
      October 13, 2015 at 12:17
      “Jevgenijs is no longer at Bondora…”

      Gross profits earned by Investors on Bondora
      https://www.bondora.com/blog/gross-profits-earned-by-investors-on-bondora/

    • “Jevgenijs Kazanins (CMO) – an economist and a digital marketing entrepreneur. Previously spent a number of years in digital marketing holding a MD position at Havas Digital and co-founding Campalyst, a social media revenue optimization software developer. Jevgenijs is responsible for customer acquisition and retention at Bondora” – http://www.crowdfundinsider.com/2014/09/49573-bondora-sees-opportunity-european-peer-peer-lending-market/

      i want to know whay Jevgenijs leave Bondora? “Jevgenijs is responsible for customer acquisition and retention at Bondora” is this related with DCA? is Bondora stop DCA after Jevgenijs leave Bondora? how about Jevgenijs words and posts before he leave Bondora?

  2. dear Bondora!

    whuy u think that u can change Rules after the loan was claimed buy borrower?
    when we invest ouer money we have a promis from you that we DONT need to do anything
    and NoI PAY anithing for collect bad loans – is this right?

    One investor write this rule: sorry this is Estonian language:

    14.8. Laenuvõtja kannab kõik sissenõutavaks muutunud nõuete makseviivitusest tingitud sissenõudmisega kaasnevad vajalikud ja mõistlikud kulud, s.h. Laenuandja kulud õigusabile, inkassoteenuse osutajale ning kohtumenetlusele, s.h. maksekäsu kiirmenetlusele

    if the loan Contract was signed when this Rule was worked (before the NEW Bondora Term of Use) How u can change it after the Contract signing? Because the Contract is the Contract!
    and it will work untill other side (borrower) dont return all ouer money and interest and penny back !!!

    u can change Term of use! we can dont agree this changes! But u CANT change it for all contracts that was signed BEFORE the term of use changed and was agree with investors!

    whay u wrote that new DCA sistems started at 08/06/2015 and will work for ALL contracts??? how can it be??? who gives this rights for u???

    • Hi, George!

      Thank you for your question. The change comes from laws of the country. When it comes to the borrowers we have to follow the laws of their country, so for Estonians we need to act in accordance with the Estonian law and for Spanish borrowers we need to follow the laws of Spain etc.

      In addition, the laws regarding to how much can be collected have also changed quite recently. For example in Estonia, the most recent change went into effect yesterday (1.10.2015) and the Supreme Court in Finland had a binding judgement on the fees that can be charged and when can they be charged just two weeks ago.

    • Ello Tatjana

      sorry but u dont answer for my question:

      whay u wrote that new DCA sistems started at 08/06/2015 and will work for ALL contracts???

      priveusly Jevgenius wrote:

      “All loans that defaulted after June 8, 2015, irrespectively of when those were issued, are being collected using the new collection process.”

      https://www.bondora.com/blog/collection-process-overview/

      and you answer me: ” For example in Estonia, the most recent change went into effect yesterday (1.10.2015)”

      second time i ask you same question : how you can started DCA systems June 8, 2015?

    • Hi George,
      We value a good dialogue with our customers and that is also one of the reasons to have an open commenting available here in the blog. Our aim is and always have been to have the investors best interest in mind by offering them the highest return on investment in the market. We strongly believe that the process currently in use serves this value and we already see the positive effect on our other markets. This similar process is also used by others in the P2P industry and so far it has proven a positive effect on the investors returns. We hope that soon enough you will see the effect from your portfolio.

  3. Hello Tatjana,

    I would like you to reconfirm (as Jev described in the other blog post) that the collection fees are strictly PROPORTIONAL to the recovered amount. I.e.: if 10 Euro of defaulted principal are recovered 0.8 Euro go to DCA and 9.2 Euro go to the investor. Please confirm that there is no upfront payment or fixed payment in any way to be made to DCAs by Bondora or the Investor.

    • Hi and yes, there are no fixed or upfront fees out of investor or Bondora in case of recovery by DCAs.

  4. > Why the collection process cost are not paid by the borrower?

    >Passing the collection costs is either already prohibited or will be prohibited soon by the
    >regulators. The regulator in this case sides with borrowers to protect them from aggressive
    >practices used by some lenders.

    Hello,
    to my knowledge, law allows a) penalties derived from interbank rate, or b) original agreed interest to be accounted in case of overdue loan. These can be accounted for till the date of full repayment.
    Can you please confirm this or possibly link me to EU rules that prohibits this?

    Also one more point…

    >… We expect higher net collection by involving DCAs before engaging in a lengthy and irreversible process of collecting through courts.

    Yes, court collection can be lengthy, but for us investors is essentially free, because borrower bears all costs. So I don’t see it as negative…And irreversible? Whats the problem with irreversibility that DCAs will change?

    Thank you very much,
    carlos

    • Carlos, going to court is not free, but costs approx. 10% of the debt. If debtor does not have a job nor any assets, I as investor would rather prefer Bondora not going to court but leave the case to DCAs (which is actually free).

    • Hi, Carlos!
      Passing the collection costs is either already prohibited or will be prohibited soon by the regulators. The regulator in this case sides with borrowers to protect them from aggressive practices used by some lenders.

    • Can you please supply us with links to particular law you mentioned (Estonian, Finnish)…?

  5. As n3tcarlos, I’m also interested in the source of this/these regulation(s). It sounds as this prohibition is based on an EU directive (or similar) as you have changed the collection fees in all countries. I know that short term credits (e.g. sms-loans) are on the EU’s agenda and some countries have already enforced laws that prohibits or make this business model less attractive but that’s based on setting limits on interest rates or restricting hours where can take these loans (Finland), and I have not yet seen anything about regulating debt collection fees.

    • Some six or seven years ago I was personally sued by Julianus Inkasso (the biggest Estonian DCA) demanding some old loan (from a leasing company) together with plenty of their side fees. And Estonian civil code basically says, that members of board of a company are fully responsible po representing legal entities and running their business operations, i.e. debt collection is part of leasing company main business activity and is supposed to be done also in-house. If leasing company decides to outsource this service, this is not what debtor is supposed to pay. Also, DCA’s fees are hard to justify in court (why a letter to debtor costs 30 euros, not 5, or 100?).

      Eventually I, not being a lawyer, managed to “win” the court case by paying only remaining principal and accrued interests, and fees of DCAa were fully discharged. And DCA had also to pay almost half of state fees.

      So necessary regulation has been already here (at least Estonia) for over 10 years already. Now I suppose it will just become more specific.

  6. Just to be clear
    TC>So necessary regulation has been already here (at least Estonia) for over 10 years already
    De facto debtor has to pay all the reasonable costs (incl. legal cost, stamp tax etc).

    Tatjana>Passing the collection costs is either already prohibited or will be prohibited soon by the regulators.
    I cannot say anything about the future, but at the moment it is NOT prohibited in Estonia. That is fact! So atm Bondora tries to be holier than the Pope. I assume no-one will thank you for that..

    • Hi Aleks!
      In each of the borrower countries where we operate the amount that can be charged for collection cost is limited to certain amount, it usually depends on the amount of the debt. And the amount that can be charged is set by the law in force. I hope that my answer clarifies the situation for you.

  7. I don’t wanna see any DCA fees on my account because i have signed agreements where investors didn’t have any costs here in Bondora. If you wanna use DCA’s then write those costs for your own account like you did probably previously some years ago when you experimented DCA’s that you told they didn’t give any results. I stopped investing in Bondora ~2 months ago when you first time announced these upcoming new rules. I haven’t signed any agreements after that. You can only take DCA fees from investors that have signed new contracts and you have to write this clearly into agreements as well.

    And please check the agreements where is written clearly that borrower pays all fees. No fees for investors.

    14.8. Laenuvõtja kannab kõik sissenõutavaks muutunud nõuete makseviivitusest tingitud sissenõudmisega kaasnevad vajalikud ja mõistlikud kulud, s.h. Laenuandja kulud õigusabile, inkassoteenuse osutajale ning kohtumenetlusele, s.h. maksekäsu kiirmenetlusele.

    • Hi Morca!
      I´m sad to hear that you have stopped investing in Bondora and understand that the agreement terms may be vague. But the reasonable costs mentioned in the agreement are regulated by the law and we need to act accordingly.

    • “But the reasonable costs…” – dear Tatjana – is this right? because i understand this post
      that u mean new Bondora DCA system COSTS for Estonia (0-35% and 0-65%) UNREASONABLE? but this is not the Investors chois!
      YOU – BONDORA found this collectors agancys, and u accept this REDICULOUS prices!
      whay the investors MUST pay? i m DONT AGREE THIS!
      i m dont agree new Terms of Use, i m dont agree new DCA system!
      i was agree the old system that was in Terms of Use: – after 60 deys default and loan going to Court! I dont see any reasons for Investors in new DCA system!

    • You can’t collect any DCA fees from investors from the old signed agreements. I don’t accept this. I invested here based on old rules + signed agreements.

      You mention “regulated by the law”. It doesn’t mean that you have to send old agreements to DCA’s if you don’t wanna put those fees into your own pocket. DCA’s are alternative choice you decided to use your own. Law doesn’t tell that you have to use any DCA’s! You have to follow law + signed agreements. You have to send them (based on old agreements) directly to court like you did previously or you can use DCA’s but using DCA’s you have to pay fees them yourself (based on law + signed agreements).

      You can take DCA’s fees from investors only after that when you fix your agreements investors sign here. If you don’t act like it is written in agreements i believe FCA protects investors here + next year Bondora is under http://www.fi.ee as well + investors can sue Bondora if you breach of contracts. And please read the signed agreements. You have to follow them.

      Here is copy paste from estonian agreements i have signed. You have to act like is written there.

      14.5. Kui sissenõutavaks muutunud tagasimaksete suurus tõuseb kahe tagasimakse summani ja teise tagasimakse summa sissenõutavaks muutumisest on möödunud üks (1) kuu, muutub kogu Laenusumma sissenõutavaks ja Laenuandjail on õigus nõuda koheselt kogu Laenusumma ja kogunenud Intressi tasumist. Juhul, kui Laenulepingu alusel kuulub veel tasumisele ainult viimane tagasimakse või on Laenuleping sõlmitud ühe tagasimaksega, kohalduvad eelmises lauses sätestatud tagajärjed siis, kui vastav makse on muutunud sissenõutavaks ja möödunud on üks (1) kuu.

      14.6. Punkti 14.5 alusel formeerunud kogunõue läheb selle tekkimisel automaatselt üle Operaatorile. Nõude ülemineku eesmärgiks on teostada Laenuandja poolt käesolevaga antavat käsundit tema nõude sissenõudmiseks (sh on Operaatoril õigus volitada nõude sissenõudmiseks ka kolmandaid isikuid). Operaatoril ei ole õigust nõude alusel saadud rahasummadele, nõude edasi loovutamiseks kolmandatele isikutele ega kasutamiseks muul eesmärgil kui käesolevas punktis sätestatud. Nõue loovutatakse tähtajatult ja nõuet tagasi nõuda ei ole võimalik. Nõude alusel rahasummade laekumisel on Operaatoril kohustus Laenuandjat laekumistest teavitada ja vastavad summad Laenuandja Portaali kontole kanda.

      14.8. Laenuvõtja kannab kõik sissenõutavaks muutunud nõuete makseviivitusest tingitud sissenõudmisega kaasnevad vajalikud ja mõistlikud kulud, s.h. Laenuandja kulud õigusabile, inkassoteenuse osutajale ning kohtumenetlusele, s.h. maksekäsu kiirmenetlusele.

    • Hey Geore, could you send that email. I also would like to jump on this. Yacop1980 at googlemail dot c om

    • TO YaCop October 12, 2015 at 23:23

      sorry cant send to you my claim becouse it have too many confidential information
      but i can paste here answer:

      Hello! This is an automatic reply to confirm that your appeal has been received by the Estonian Consumer Protection Board. We will register your appeal. If the appeal is an application, a request for clarification, an indication, etc. and it contains your name and contact details, we will answer it at the earliest convenience but no later than within 30 working days. If you have any further questions/comments concerning your correspondence, please feel free to contact us via telephone (+372) 620 1700 (from Monday to Friday from 8 am until 4.30 pm).
      With Best regards,
      The Estonian Consumer Protection Board Counselling phone: +372 620 1707 (M– F 9.00–16.00) Website: http://www.tarbijakaitseamet.ee

      some days after they call me back and we talking about my claim and what they can do for me

    • Hi Morca,
      I suggest we should talk about this with you in person- it would be easier to explain and try to give you answers to whatever questions you might have about the process. Can you please send your contact details? Thanks!

    • I think i don’t have nothing to discuss in privatly. If you plan to take any DCA fees from investors based on old signed argeements then you are breacing of contracts. Keep in mind that Law doesn’t tell that you have to use any DCA’s at all. If you wanna use DCA’s then it is your own decision. DCA’s are alternative choice you wanna experiment yourself and ivestors doesn’t have to pay for this (based on agreements i have signed here previously – read them!). Investors didn’t have any fees in Bondora since the beginning of this portal up today.

      If you wanna use DCA’s and wanna collect from investors any DCA fees then you can do this only after that when you first fix your agreements investors sign here (you have to write DCA fees clearly out into agreements) and you can collect DCA fees only based on new signed agreements. If investors accept new rules and they signed those agreements then they are ready to pay DCA fees as well.

      I made investments in Bondora last ~6 years knowing that Bondora deals with problematic loans and i don’t have to pay any fees investing here. I have very big portfolio in Bondora. Of course i don’t know how big portfolios have other retail invetors but i guess i have one of the biggest here. Now when you changed the rules i stopped investing here, because your new rules doesn’t meet my investment criterias any more. Now i’m taking money out from Bondoa that comes back from my previously made investments and i invest it on another places.

      I don’t wanna waste my time “on this currect situation/problem” but i’m telling you one more time again that law doesn’t tell you have to use any DCA’s and you cannot take any DCA fees from investors based on old signed agreements + law. If you do this you are breacing of contracts and i’m pretty sure it won’t end up good for Bondora. I’m sure UK FCA, http://www.fi.ee, http://www.tarbijakaitseamet.ee + if needed, court as well are on investors side based on law + agreements investors signed here. DCA’s are alternative choice you wanna use your own and investors doesn’t have to pay for your experiments (based on old signed agreements). Investors have to pay DCA fees only after that when you’ll write DCA fees out in agreements and you can collect DCA fees only from new signed agreements.

    • Following Morca’s explanation I hereby explain that no DCA fee must be allocated onto my loan. I have not accepted that DCA fees to be paid by the investor. It is clearly stated in the agreements that Bondora will pay for all fees related to default process and recovery.

  8. Hello,

    I see two separate issues, first about means to collect (DCAs vs courts) and second about transfer of costs from debtor to creditor. I can’t see any reason to treat these two problems as one issue.

    1. DCA vs courts

    >The reasoning behind the change is that we expect higher net collection by involving DCAs before engaging in a lengthy and irreversible process of collecting through courts.

    If its just a matter of betting on higher net collection is there any reason not to allow users to decide if they want to use court or new DCAs model? This way they could decide and “bet” on their own. Its really that simple.

    2. Transfer of costs

    Is it really about transfer of costs from debtor to creditor (due to regulations) or are we talking also about some costs on Bondora side that will be transfered to creditors? Could you please disclose actual costs in past?

    Thank you,
    carlos

    • Hi again, Carlos!

      We’re testing this system and should it produce less returns we can always go back to the previous one.

      Basically, you have two questions:

      For one, collection costs that can be charged from the customer on top of the owed amount are being capped in all countries. Therefore, in order to have interested DCAs working on cases, the success fee setup is most reasonable. In comparison to recovery through court – this fee is charged at collection by DCA only in case of successful recovery. With courts, the fee is charged at the start of process regardless of the outcome.

      The second part of the question is about whether investors or Bondora should pay for it. It is probably hard to have unbiased discussion about it, but our arguments for charging this from investors are: 1. investors get the corresponding higher returns from performing loans in the same risk class and 2. we have reduced (and also unified across risk classes) our monthly management fees to reflect the situation.

      I hope this helped and have a nice weekend!

    • ello Tatjana

      i dont know whay but u wont talk or discuss with me… But i have some questions!

      https://www.bondora.com/blog/collection-process-overview
      Jevgenijs wrote: «Jevgenijs KazaninsPost AuthorSeptember 24, 2015 at 12:22
      Hello, James! The new process applies to all loans that have defaulted
      after June 8, 2015.» whay he told that? and you today wrote: “We’re testing this system and should it produce less returns we can always go back to the previous one”

      maybe i m dumme; but you have a Financial Busines with INVESTORS MONEY!
      i m investor and this is my money to !
      You will change default recovery systems every 15 days?
      or you only TESTING your Busines?

      I hope that u have a basic law education and u MUST UNDERSTAND that first step
      for this changes is:
      – asking Investors, because this is they money, what they think about changes
      – 2nd step: change rules (Term of Use) and only if Investors agree this changes
      u can do 3-rd step: sign contracts with collector agencys and apply new system

      and every student told you that U CANT do that wrote Jevgenijs: The new process applies to all loans that have defaulted after June 8, 2015″ without forst 3 steps!

      and you can apply new system Only for NEW Loans that was signed AFTER the NEW agrements was signed from INVESTORS!!!

      I hope this helped and YOU have a nice weekend!

    • Hi,
      We value a good dialogue with our customers and that is also one of the reasons to have an open commenting available here in the blog. Our aim is and always have been to have the investors best interest in mind by offering them the highest return on investment in the market. We strongly believe that the process currently in use serves this value and we already see the positive effect on our other markets. This similar process is also used by others in the P2P industry and so far it has proven a positive effect on the investors returns. We hope that soon enough you will see the effect from your portfolio.

  9. Thanks morca for that exhaustive comment on the present situation. As I have also mentioned on the forum, Bondora can’t enforce new terms on investors unless the investors have accepted the new terms by entering into new agreement. But then only loans that are entered into after the investors accepted the changes can be subject to the new terms. (One option would be to make an amendment to already signed agreements, but to make such significant negative changes would probably require very clear information in order to be valid.)

    As a lawyer, with the information at hand, I think Bondra will have a hard time convincing a court that they have the right to one-sided change terms which entails higher cost/fees for the other party. As a lot of people have already said, the old agreements and information presented to investors clearly stated what debt collection actions that would be taken and how the costs would be distributed.

    If Bondora had been more transparent and had a good dialog with investors this situation could probably have been avoided or mitigated.

    Morca, please let us know the outcome of your discussion with Bondora.

    • Pellen,
      We value a good dialogue with our customers and that is also one of the reasons to
      have an open commenting available here in the blog. Our aim is and always have been to have the investors best interest in mind by offering them the highest return on investment in the market. We strongly believe that the process currently in use serves this value and we already see the positive effect on our other markets. This similar process is also used by others in the P2P industry and so far it has proven a positive effect on the investors returns. We hope that soon enough you will see the effect from your portfolio.

    • Tatjana,

      Bondora has lost a lot of credibility and trust. Winning it back is not that easy. We have read many of Bondora’s – everything will be awesome – articles. We do not trust your words anymore.

      As long as Bondora keeps promising and does not deliver we will continue to argue with you directly or via FCA, financial ombudsman, Consumer Protection Board or court action.

      I urge you to reassess how you handle defaulted loans that are based on “old” T/C. Any by “old” I mean the T/C that cleary states that borrower has to pay all fees.

      Why is the sucess fee in Estonia 35% although it is the market that shows the highest recovery? As the the estonian market shows strong recovery, it is not reasonable that DCA have the highest sucess fees in this market. It would have made sense to me if Spain and Finland had higher sucess fees as recovery appears to be harder in these markets. Therefore, I may believe that you promised 35% to DCA in Estonia in order to compensate for low sucess fees in Spain or Finland. – I know that you want to gain experience if higher success fee result in higher net payout to the investor. Really? Why then in a market that shows strong recovery? Please make agreements about sucess fees with your OWN money out of your own pocket. The full recovery amount belongs to the investor!.

      In general, if Bondora wants to use DCA then please pay for by yourself. It is against the T/C to allocate any fee onto the investor for defaulted loans that were issued under the “old” T/C. For these loans Bondora has to turn to court right away and pay for the court fee upfront.

      Regarding collection fees: for finnish loans up to 210 Euro of collection fees can be allocated onto the borrower. see page 23: http://www.kkv.fi/globalassets/kkv-suomi/julkaisut/linjaukset/toimialakohtaiset-linjaukset/en/good-practice-in-consumer-debt-collection-2014.pdf – If Bondora does not use all legal possibilities, then this is fraud against the investor.

    • This is taken from you new T/C:

      3.5. The Operator shall transfer any funds collected as fulfilment of the Claims to the
      Investor’s Client Account. However, the Fees (e.g. contract fee and annual management
      fee) and debt collection fees paid by the Borrower shall remain to the Operator to
      compensate the costs related to the servicing of the Loan Agreement and debt
      collection and shall not be transferred to the Investor.

      If Bondora can not allocate debt collection fee onto the borrower anymore, why do you write in your T/C that Bondora will keep the debt collection fees?

      It seems like you charge debt collection costs to the borrower + sucess fees to the investor.

  10. Tatjana, You wanted me to indicate question that remained unanswered. Here they are:

    (1) Success fee:
    Why is the success fee in Estonia 35% although it is the market that shows the highest recovery? As the the estonian market shows strong recovery, it is not reasonable that DCA have the highest sucess fees in this market. It would have made sense to me if Spain and Finland had higher sucess fees as recovery appears to be harder in these markets. Therefore, I may believe that you promised 35% to DCA in Estonia in order to compensate for low sucess fees in Spain or Finland. – I know that you want to gain experience if higher success fee result in higher net payout to the investor. Really? Why then in a market that shows strong recovery? Please make agreements about sucess fees with your OWN money out of your own pocket. The full recovery amount belongs to the investor!.

    (2) Regarding compensation for debt collection on Finnish loans – for Finnish loans up to 210 Euro of collection fees can be allocated onto the borrower. See bullet point 2: http://www.kkv.fi/en/facts-and-advice/payment-bills-debt-collection/delayed-payment-and-collection/recovery-costs-and-debt-collection-process/ Please check if the finnish Competition and Consumer Authority consumer protection board is wrong and please state where I can find the legal base for not charging compensation for debt collection to finnish borrowers.

    (3) Debt Collection fees in new T/C:
    This is taken from you new T/C:
    3.5. The Operator shall transfer any funds collected as fulfilment of the Claims to the
    Investor’s Client Account. However, the Fees (e.g. contract fee and annual management
    fee) and debt collection fees paid by the Borrower shall remain to the Operator to
    compensate the costs related to the servicing of the Loan Agreement and debt
    collection and shall not be transferred to the Investor.

    If Bondora cannot allocate debt collection fee onto the borrower anymore, why do you write in your T/C that Bondora will keep the debt collection fees? It seems like you charge debt collection costs to the borrower + sucess fees to the investor.

    (4) I will not argue again about the retroactive change of the T/C that leads to heavy disadvantages for the investor. I do not agree on that. Appropriate steps are beeing assessed.

    (5) Jevgenijs indicated that fees for Collection Agency will be visible in the loan book. Will Bondora keep this promises?

    Thanks.
    YaCop

    • Hi Arne,

      Please find answers below:
      (1) There is no cross-subsidizing with success fees between countries. The agreement with 35% in Estonia is one specific DCA and we want to see if this means that they will do 4x better job than the next one in line. And it is entirely possible. Please consider that with the new regulations, we cannot send borrowers in EE to our “intermediate court” anymore; also „strong recovery” is not the same as “fast recovery”. Therefore, instead of believing we prefer to test different options and make decisions that are best for investors on factual data rather than guesses.
      (2) That is correct. We already charge number of paid notifications to borrowers during the first 60 days (ie before default) which would be included in this number. What is remaining, the local DCAs have authority to claim from the borrower in case of success. Also mind that the Success fees/agreements that we have with DCAs already account for these sums. In other words, the success fees would be higher if they would not be eligible for some of those amounts.
      (3) Thanks for pointing out section 3.5. and we apologize for the confusing wording but I can assure you that we do not charge both.
      (5) We aim to build the relevant views after our test period with DCAs is over and it is clear what is exactly required and what can be automated, because currently the exchange is mostly manual with different DCAs and that is not feasible to implement in full scope.

    • You had a trial with DCAs before and all it did was delay court action.

      Once again you are doing your experiments at the expense of your investors. The Spanish and Slovakian fiascos last year cost us a lot and here you are again using us as guinea pigs.

      I do not agree to pay success fees for previous loans when there is no mention of collection costs being at our expense, if you do not want to do this work yourselves you should pay the costs. I will not be lending under such conditions as the default rates for your borrowers are excessive.