RATESETTER has fully acquired two former wholesale lending partners and bought a stake in another, meaning it can still lend to the firms’ customers without flouting the City watchdog’s rules.
The Financial Conduct Authority recently confirmed that it was unhappy with peer-to-peer platforms lending to other lenders and said the activity may be in breach of current regulations. It wrote to the chief executives of all the platforms, urging them to take action if they were lending to other lenders that did not have the required permissions.
In March, RateSetter said that it was in close contact with the regulator as it transitioned to new arrangements with existing wholesale partners.
RateSetter announced on Tuesday that it has bought an equity stake in George Banco and will lend directly to the guarantor loan provider’s 10,000-strong customer base, with George Banco acting as introducer.
Peer-to-Peer Finance News reported last month that RateSetter’s co-founder and chief operating officer Peter Behrens (pictured) had been appointed as a non-executive director of George Banco, signalling that it was making a change in its relationship with the firm.
The ‘big three’ P2P lender also said on Tuesday it has acquired specialist motor finance providers Vehicle Stocking and Vehicle Credit out of their parent company’s administration.
“RateSetter intends to rebrand both businesses and invest in them to build on its current motor finance capabilities,” it said. “RateSetter also previously provided wholesale finance to these businesses and will now deliver secured finance directly to their customers.”
RateSetter said the deals would strengthen its direct lending distribution network, build closer relationships with borrowers and mark the end of wholesale lending originations through the platform.
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“Our focus on direct lending supports our goal of delivering excellent risk-adjusted returns for investors and attractive finance to borrowers,” said Behrens. “To achieve this, we have invested in our direct origination capabilities by bolstering our in-house expert lending teams.
“Today’s announcement builds on this – by extending our direct distribution network we build closer relationships with our borrowers and create more opportunities for future growth.”
Last Friday, RateSetter upgraded its data disclosure on its loan book and expected losses, which independent P2P research firm 4th Way heralded as “top-tier” transparency.
The platform has funded loans totalling £1.8bn to more than 300,000 individuals and businesses across the UK since its launch in 2010.