Post by shimself on Aug 1, 2017 8:37:54 GMT
Email from Huddle today slagging off Ratesetter. How low can you go...
RateSetter hit by £80 million loss amid struggling loans
P2P lenders, RateSetter, recently announced that they would use their own funds to protect their investors from losses. This move came to ensure that their 50,000 investors were not hit by struggling or defaulting loans.
Loans shown to be struggling amount to around £80 million, with RateSetter stating that these funds will still be repaid by borrowers as normal. Last month, RateSetter backed away from their previously announced relationships with UK lending platform; George Banco.
The majority of lenders on the site are smaller investors. These users are often trying to leverage their savings by lending to other individuals and benefitting from higher interest rates, that are unavailable from high street banks.
Co-founder of RateSetter, Peter Behrens, stated: “We did something on behalf of our lenders that was quite clearly a mistake. It is not right for them to take that hit.”
With RateSetter’s peers shouldering the decision of the association, many believe this could be one of the first initial signs of potential problems within the P2P sector and confirming that these lending platforms are not immune to issues that plagued traditional banking.
It's laudable that RateSetter is bearing the losses, rather than passing this onto their investors. However, the overarching lesson is that investors want assurance that they don’t end up in this loss making position in the first case. Platforms need to put systems and controls in place to ensure this doesn’t happen.
At Huddle, we tightly manage credit risk, by proactively working with borrowers prior to any potential issues arising. It is our policy never to lend money to a borrower with whom we have not met.
Going back to traditional ways of doing things, we place huge merit on looking the borrower in the eye and getting to know them and their business before making a loan. We also monitor the borrower through various internal processes, and often know in advance when a borrower is likely to default. This allows us to enter into a dialogue with the borrower to understand any likely situation that may put the loan at risk.
Accompanied by a solid track record and run by members of the parent company, Access Commercial Finance, who themselves are a primary lender to SME’s, we are confident in our ability to manage credit risk on our investor’s behalf.
RateSetter hit by £80 million loss amid struggling loans
P2P lenders, RateSetter, recently announced that they would use their own funds to protect their investors from losses. This move came to ensure that their 50,000 investors were not hit by struggling or defaulting loans.
Loans shown to be struggling amount to around £80 million, with RateSetter stating that these funds will still be repaid by borrowers as normal. Last month, RateSetter backed away from their previously announced relationships with UK lending platform; George Banco.
The majority of lenders on the site are smaller investors. These users are often trying to leverage their savings by lending to other individuals and benefitting from higher interest rates, that are unavailable from high street banks.
Co-founder of RateSetter, Peter Behrens, stated: “We did something on behalf of our lenders that was quite clearly a mistake. It is not right for them to take that hit.”
With RateSetter’s peers shouldering the decision of the association, many believe this could be one of the first initial signs of potential problems within the P2P sector and confirming that these lending platforms are not immune to issues that plagued traditional banking.
It's laudable that RateSetter is bearing the losses, rather than passing this onto their investors. However, the overarching lesson is that investors want assurance that they don’t end up in this loss making position in the first case. Platforms need to put systems and controls in place to ensure this doesn’t happen.
At Huddle, we tightly manage credit risk, by proactively working with borrowers prior to any potential issues arising. It is our policy never to lend money to a borrower with whom we have not met.
Going back to traditional ways of doing things, we place huge merit on looking the borrower in the eye and getting to know them and their business before making a loan. We also monitor the borrower through various internal processes, and often know in advance when a borrower is likely to default. This allows us to enter into a dialogue with the borrower to understand any likely situation that may put the loan at risk.
Accompanied by a solid track record and run by members of the parent company, Access Commercial Finance, who themselves are a primary lender to SME’s, we are confident in our ability to manage credit risk on our investor’s behalf.
