RateSetter’s acquisition by Metro Bank will eventually leave a gap in the top three peer-to-peer lenders, but who is best placed to fill it?
Metro Bank last month completed its acquisition of RateSetter and will go on to be the sole funder of its consumer loans. RateSetter said existing investors will continue to receive interest and repayments and its loanbook would go into run-off, effectively removing the platform from the retail P2P market for new investors.
It traditionally made up the third place in the ‘big three’ lenders with a £4bn loanbook alongside Funding Circle, which has lent more than £6.2bn and Zopa which has funded £5bn of loans.
“I think it’s fair to say it is just the big two now, with the third being a long way behind,” Neil Faulkner, managing director at P2P analyst 4th Way, said.
“No other platforms have achieved either the results or scale they need to be seen in the same class as Funding Circle, Zopa and RateSetter.”
MarketFinance could stake a claim to being the next largest, with a loanbook of more than £3bn but its focus is on institutional and high-net-worth investors. Faulkner suggested that Assetz Capital, which has a loanbook of more than £1bn, can now stake a claim to being the third largest retail P2P lender.
This is a mantle that Stuart Law, chief executive of Assetz Capital, is reluctantly happy to take up. “It is with sadness that I think we are probably one of the ‘big three’ now,” Law said. “RateSetter put so much effort into transforming the industry and making it what it was. “We are putting a lot of efforts and costs to getting working again following the crisis.”
Read more: Assetz offers ‘home’ for RateSetter lenders
Law highlighted that Assetz could currently be the largest retail-orientated P2P lender as Zopa focuses on its bank launch and Funding Circle remains open only to institutional backers while it supports the coronavirus business interruption loan scheme.
Both Zopa and Funding Circle have said they remain committed to retail investors as part of a diverse range of funding channels.
“For the next couple of months at least Funding Circle will be focusing on the coronavirus business interruption loan scheme (CBILS), so it’s temporarily not doing P2P lending in the UK,” said Faulkner.
“Zopa hasn’t shown any signs yet of shifting away from P2P lending, although it could certainly turn around and do so when it’s got its bank going properly.”