RATESETTER is giving all its lenders an option to sell out of their investment free of charges, as part of its wind-down of exposure to its wholesale lending portfolio.
The peer-to-peer platform wrote to investors on Tuesday to outline “interventions” it has made on three former wholesale lending partners.
RateSetter had been winding down its wholesale lending business since last December, after it first emerged that the City watchdog was uncomfortable with P2P platforms lending to other lenders. In February, the Financial Conduct Authority confirmed that the practice may be in breach of the rules.
Detailing the interventions, RateSetter said it purchased the operating subsidiaries of the Vehicle Trading Group in May after the company went into administration because it had taken on too much debt.
The companies, Vehicle Credit, which makes loans to consumers to buy cars. and Vehicle Stocking, which makes loans to motor dealerships to buy cars, will be integrated into RateSetter’s motor finance lending. The firms are repaying their existing wholesale loans of £24m and £12m respectively as their end borrowers repay in line with the loan schedules.
RateSetter also announced that it had taken ownership of Adpod, an advertising company that borrowed £12m from Vehicle Trading Group in 2015 but got into financial difficulty and still owes £8.5m. The company has said it will absorb any losses as opposed to using the provision fund.
RateSetter also took a minority equity share in consumer guarantor loan specialist George Banco. The platform had intended to lend directly to George Banco borrowers, but has since decided against this and the firm is repaying its existing loans of £32m as its end borrowers repay in line with the loan schedules.
Investors concerned about the performance and impact on their portfolio and the RateSetter provision fund, even if they are not exposed to the relevant loans, have until 17 August to review and ask for a free sell-out by emailing RateSetter.
This is subject to funds being available on the market.
“These three interventions all stem from RateSetter’s wholesale lending which we discontinued in December 2016 and we do not intend to intervene like this again,” said Peter Behrens (pictured), chief operating officer and co-founder at RateSetter.
“The expected default rate on RateSetter’s outstanding lending is unaffected and stands at 2.9 per cent, and currently we estimate that the provision fund is large enough to cover all expected future losses.
“This offer will last for one month, from 18 July to 17 August 2017. We would like to point out that sell-outs are always subject to there being other funds in the market to replace funds withdrawing from loan contracts.”