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The First Flickers of Market Consolidation?

One of the country’s largest peer-to-peer lending platforms has just absorbed the loanbook of an early-stage outfit.


GraduRates is a peer-to-peer lender which specializes in providing loans to students in postgraduate education. The platform has moved pretty slowly since being founded in 2012 by Jothan Webb, and has now ground to sudden halt. According to RateSetter, GraduRates made the decision to close down operations ahead of the impending regulation of the P2P sector by the FCA earlier this year. But Mr. Webb was determined to ensure that his customer base enjoyed an uninterrupted service nonetheless. So, what to do?

RateSetter has stepped in and effectively taken over the servicing of the modestly sized GraduRates portfolio. Whilst always offering full transparency about these developments to the student borrowers involved, all GraduRates loans have now been moved over to the RateSetter platform. The situation is unchanged for these borrowers – in spite of the folding of the GraduRates platform.

Rhydian Lewis, Co-Founder and CEO of RateSetter, explained the significance:

"This is a sign of the peer-to-peer lending industry growing up. One of the things the Government is focussed on in the upcoming HMT Consultation on peer-to-peer ISAs is the ability for platforms to wind down in an orderly manner. This agreement between RateSetter and GraduRates will serve as a welcome example of the peer-to-peer market finding solutions that work in the best interests of customers."

The sub-story here pertains to the broadening of RateSetter’s product set. The rapidly growing platform now has a foothold in the student lending space – which has already proven to be massively lucrative on the other side of the pond (see SoFi, Upstart and Pave). Increased diversity of product among the largest platforms is in itself a vehicle of consolidation – as it means there are fewer niches left for new entrants to address.

But the big news is the orderly fashion in which GraduRates has closed up shop. For the sake of safeguarding the reputation of the sector – we can only hope for further examples of this style of consolidation down the line. 

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