Has BM stopped paying interest?

A few personal thoughts. 

1. Contractual Issue? I think there was a danger that it would turn out to be a contractual issue as the fca made it clear that wholesale lending was outside the p2p rules and was turning some p2p platforms into something else before the issues with these loans became public. I think Ratsetter knew this in their conversations with the fca even before the issues got as big as they did with adpod. Also RS also admitted they broke their own rules in at least some of the loans in question and their financial controls didnt work. There was a contractual risk to RS in not covering the loans which they hinted at in all their correspondence. How big this risk was we will never know, nor the potential impact.

2. Did they have a choice? At the end of the day, i assume most large platforms will want to IPO or something similar to realise a gain for their founders, employers and investors. All large platforms will do what they can to make this happen within the resources they have available if they think it is worth while. In fact all companies will do what they can when confronted with issues.  I think in the long run they were sure it was money well spent as would many companies. There may also have been some pressure, real or otherwise, from the FCA in the various conversations they had. I think it will be difficult to know what would have happened if they had taken a different route, e.g. propped up the PF to try and ride out the issues. I dont think they would have taken a route that would have meant an immediate cut for lenders. For example, the George Banco loans have turned out to be very profitable and the loan book is growing. Non-Standard Finance bought the guarantor loan provider last August. The London-listed firm said that the acquisition has “transformed” its guarantor loans business, helping that division’s loan book to grow by 35 per cent. It said the acquisition contributed to the group’s overall operating profit rising 497 per cent to £2.7m in its latest annual results. They are now the second largest guarantor loan provider in the UK. So keeping the loan book looks like it would have been better for RS over the last year if they had been able to do it.

The cars we are told are performing in line with expectations.  I think ADPOD was always the bigger issue. How much of that loan RS get back only time will tell but it feels like some of it will remain written off longer term now that they have written off the lifetime amount in their accounts.

As you say no BM clients have lost money after accounting for interest paid so far. It will always be difficult for BM compare themselves with the likes of RS where no investor has ever lost any capital or interest to date. For both platforms past performance is no guarantee of the future. RS have underwritten the ADPOD loan. I am guessing that BM even if they wished to would struggle to do something similar for the COL loans if it turns out there are problems with them or any other loans, although i have nothing to doubt the statements BM have made about their very high level of confidence in the COL loans.

There will always be a concern about RS processes after the issues last year, in the same way there will always be concerns about BM processes after the COL issues. Hopefully both platforms will be successful long term...