RateSetter sells £4.65m of defaulted loans
RateSetter has sold off £4.65m of non-performing loans and put the proceeds into its provision fund.
The ‘big three’ peer-to-peer lender said that the two books of bad debt comprised loans written across all years of lending, where it has exhausted its collections and recoveries processes.
“The debt sale process started in December 2019 and we are pleased to say that we did not need to reduce our price expectations in light of the coronavirus outbreak,” RateSetter said.
Read more: How debt sales can benefit P2P investors
It did not take any revenue from the debt sale, putting all proceeds into the provision fund.
“We always do what we can to support borrowers, but sometimes a borrower is unable to repay their loan, so the provision fund steps in to return the outstanding capital to investors,” RateSetter said.
“RateSetter’s customer operations team in Leicester then works closely with the borrower to put in place an appropriate repayment plan to recover as much of the outstanding money for the provision fund as possible.
Read more: Withdrawal requests slow as RateSetter maintains liquidity
“However, sometimes we are unable to increase the recoveries further and so, when we have used all the options available to us, the best way forward is to turn to a specialist debt management company who will purchase the loans with proceeds going to the provision fund.”
RateSetter did not disclose the name of the buyer but said it only sells debt to Financial Conduct Authority-regulated specialist debt management firms.
A number of P2P lenders have sold off non-performing loans once they have exhausted their recoveries processes, including fellow ‘big three’ platform Zopa.
