Ratesetter courted by industry body to rejoin fold

The Peer-to-Peer Finance Association wants the platform to rejoin the body two years after leaving following a bad loans scandal.

One of the country’s leading peer-to-peer lenders could be set soon rejoin the industry’s trade body two years after leaving in the wake of a bad loans scandal.

Ratesetter resigned its membership of the Peer-to-Peer Finance Association (P2PFA) after it breached the trade body’s principles when it stepped in to bail out bad loans.

However, P2PFA officials led by chair Paul Smee, are keen for RateSetter to become a member again, and hope to persuade the lender to rejoin by the end of the year.

A spokesman for the P2PFA AltFi.com: "Ratesetter is a major part of the peer-to-peer industry. We would be open to discussing membership with any platform that is willing to accept the standards we operate under." 

The move comes as the industry still reels from the demise of Lendy last month, which collapsed into administration with £160m in outstanding loans and with more than £90m in default. The failure of the group leaves about 22,000 investors unsure of whether they would get their money back.

Ready to talk

Ratesetter has not been formally approached by the body, led by Paul Smee, a former head of the Council of Mortgage Lender, but is willing to listen if the association was ready to talk, according to a report in The Sunday Times.

The platform, along with Funding Circle and Zopa are referred to as the ‘big three’ firms in the industry, which collectively arranged lending worth more than £10bn  during the third quarter of 2018, according to the most recent figures released by the P2PFA.

A spokesman for Ratesetter said: “RateSetter helped set up the P2PFA because we believe our industry should always try to work together. We note the recent reports that the P2PFA is interested in RateSetter re-joining. This is understandable given that RateSetter now has the biggest overall customer base. They have not actually asked us yet. If they did, we would listen. We would need to understand how, under new leadership, the P2PFA’s approach has changed.”

Following the Lendy collapse, regulator the  Financial Conduct Authority (FCA) ruled that investors could not put more than 10 per cent of their “net investable assets” into peer-to-peer platforms. The City watchdog added that industry marketing should be restricted to sophisticated and high net worth investors.

Investor protection

Christopher Woolard, the FCA’s executive director of strategy and competition who led the review, said: “For peer-to-peer to continue to evolve sustainably, it is vital that investors receive the right level of protection.”

However, Ratesetter chief executive Rhydian Lewis said: “No longer can our sector be dismissed as the Wild West of investing: the cowboys are being driven out and the regulation is now on a par with mainstream savings and investment choices.”