RATESETTER has announced that it has decided not to lend directly to George Banco’s customers as there are “better uses of our development resources”.
The ‘big three’ peer-to-peer lender bought a stake in the guarantor loan provider, which was a former wholesale lending partner, last month. It had also agreed to lend directly to its 10,000 customers, with George Banco acting as introducer.
“We have subsequently decided not to go ahead with this new arrangement with George Banco,” said RateSetter. “After further examination of the infrastructure required to do this, we concluded there were better uses of our development resources which may be deployed more effectively to source other borrowers.”
It is thought that it is more costly to integrate George Banco’s borrowers into RateSetter’s system than it would be to source the same number of customers directly.
The business and consumer lender will keep its equity stake in the firm and its co-founder Peter Behrens will remain as a non-executive director on George Banco’s board.
“The existing wholesale loans to George Banco will continue to be repaid in accordance with the schedule of the existing loan contracts,” the platform said. “The total of these existing loans currently stands at £31.5m.”
RateSetter has been winding down its wholesale lending business since last December, after it emerged that the City watchdog was uncomfortable with P2P platforms lending to other lenders.
In February, the Financial Conduct Authority 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.
Earlier this week, RateSetter announced that it had raised a further £13m from City investors, including Neil Woodford’s fund Woodford Investment Management and asset management giant Artemis. The fundraising round follows RateSetter’s recent hire of investment veteran Paul Manduca as chairman.