Peer2Peer Finance News
The UK's first peer-to-peer finance magazine for investors and the industry
  • Home
  • News
    • Personal Finance News
    • Industry News
    • SME News
    • Global News
  • Property
  • IFISA
    • IFISA Guide
  • Video
  • Open Banking
  • Cryptocurrency
  • Features
    • Joint Ventures and Promoted Content
  • Comment & Analysis
  • What is P2P?
  • Partners
  • Events
    • Past Events
  • P2P Power 50
    • Power 50 2020
    • Power 50 2019
    • Power 50 2018
    • Power 50 2017
  • Sign up to our e-newsletters
  • Magazine
  • Directory
  • Jobs
  • My Account
    • Manage Account
    • Change Password
    • Log In
    • Log Out
shutterstock_226990156
January 3 2019

How debt sales can benefit P2P investors

Marc Shoffman Comment & Analysis 1st Credit, Alex Hilton-Baird, Financial Conduct Authiority, Hilton Baird Collection Services, Iain Niblock, Orca, Ratesetter, Zopa

DEBT collection has negative connotations of bailiffs knocking down doors, but it is proving to be a useful way to help peer-to-peer lenders chase unpaid debts and ensure investors can still get a return that is owed to them.

In recent months, Zopa has sold a book of bad loans to a debt purchaser, while Lendy has said it is in talks to sell off some loans that would ensure investors can get some of their funds repaid.

Back in 2016, RateSetter sold £2.1m of bad loans to debt management company 1st Credit, in what was believed to be a first-of-its-kind deal for UK P2P lending.

By selling off bad debts, platforms can ensure that investors get some funds repaid even if they are unable to settle the arrears themselves.

This may raise concerns about the treatment of defaulted borrowers when left in the hands of debt collectors, but the sector has moved on in recent years, with debt collection and purchasing companies operating in consumer credit now overseen by the Financial Conduct Authority.

With regard to its recent debt sale, Zopa said that it had ensured its chosen purchaser treated people “fairly and compassionately while also working towards the best possible repayment outcome.”

Alex Hilton-Baird, managing director of Hilton Baird Collection Services, is one debt collection firm that works with P2P lenders.

“While we are seeing high success rates ourselves, the likelihood of a successful recovery is often dependent on the nature of the debt and the level of underwriting applied by the lender at the outset,” he said.

“With the right partner, it is possible to protect their position and, if they act early enough, this is often achieved without the need to terminate the agreement.”

Many debt collectors and purchasers are also members of Credit Services Association, which has strict standards on how those in debt should be treated.

Its debt-buying members have also agreed to help fund free-to-customer debt advisers.

“Collecting debt is the core business of debt collection businesses, not a P2P lender such as Zopa and RateSetter,” said Iain Niblock, chief executive and co-founder of P2P analysis firm Orca.

“If a debt collection business can recover value from a defaulted loan this is a worthwhile practice.”

Read more: Are P2P investors better off selling bad loans or relying on recovery?

ThinCats lent record £112m in 2018 Flender halts cross-border lending as Brexit bites

Related Posts

KONSKIE, POLAND - August 18, 2019: FCA Financial Conduct Authority logo on mobile phone

Comment & Analysis, Features, Joint Ventures and Promoted Content, Top 3

Rules and retail investors

Rishi Sunak

Comment & Analysis, Industry News, News, Top 3

What the Budget 2021 could mean for P2P lending

Jewelry holding magnifying glass with a bracelet.

Comment & Analysis, News, Top 3

Is P2P pawnbroking coming back into fashion?

Popular posts:

  • Chancellor unveils recovery loan scheme
  • Budget outlines plans for £15bn of green bonds in 2021
  • Government to launch replacement future fund scheme
  • BBB sets out further details on recovery loan scheme
  • Zopa exec “very excited” about embedded finance for lenders
  • Treasury launches £100m Taxpayer Protection Taskforce
Back To Top
  • Home
  • Contact
  • About
  • Team
  • Advertising
  • Subscribe
  • Privacy
  • T&Cs
  • Disclaimer

Follow Us on Social Media

© Peer2Peer Finance News 2020
• Additional design by