Ratesetter must be cleaning up.......

RS make a contribution to the PF its not the balance between lender and borrower that goes to the PF

I doubt Ratesetter are making much money. Given the unbelievably low figure Metro Bank have paid for Ratesetter I reckon it is pretty likely they were staring down the barrel of insolvency and had no option but to accept whatever they could get for the business. Massive humiliation for Rhydian Lewis and co, regardless of what the PR blurb states. 

It will be interesting to see where the PF is at the end of the month - bound to brimming :-) 

So do lenders currently of course.

P2P is still working for Zopa! They have just expanded into other products (so far anyway).

They expanded into banking... where is there profit?

Have to wait and see, but at least they are expanding (into banking and FSCS protected products) not winding up or giving up on P2P. What will happen in the future we don't know, but I don't think Zopa should be lumped together with the platforms that have died or are in dire straits at the minute.

Tempting fate here. I know. 

I completely agree (unfortunately) that the larger problem is not Ratesetter, it is P2P retail business case doesn’t work.
But, the cause of that isn’t Covid at all. It’s that banks have been subsidised by government by credit guarantees, which undercut the risk-adjusted interest rate to below zero. No interest rate can compete. It’s Gresham’s law in modern form. That’s a *solvency* crisis. The business is ultimately very slowly loss-making.

However, we are here today because of a *liquidity* crisis, not solvency. The *liquidity* crisis was caused exactly and only by a couple of appalling Ratesetter management decisions, which they were too slow and arrogant to reverse within the two critical weeks when they had the chance in March. After that, it was always too late.

Once they saw that money was flowing out, the one thing they needed to do was raise interest rates immediately high enough to stop it. “Whatever it takes”. 10%, 15%, whatever it takes. How many times have you heard that phrase from the European Central Bank about its QE? It’s *necessary* and it *works*. It can’t work forever to stop a solvency crisis, and people might have that criticism of the ECB, but it does work in the medium term. You have just a couple of days to stop a bank run, or there is no recovery possible.

Think about this: if RS had increased interest rates to 10% overnight, from 4%, they’d have been on the hook for 6% of £800m. That’s £36m cash burn in the nine months from March to when they get acquired by Metro, which sounds like a lot of money. But their business was valued at over £200m at one point, and they are now selling for at most £12m, or maybe only £2m. Even if they could have preserved a semblance of being a going concern, and sold for £100m, that’s an extremely good return for £36m in nine months. Instead, they have nothing. Nothing. They burnt their entire business in a dumpster fire within two weeks, because they were too arrogant to change their policies.