Bondora - the Estonian P2P platform - has updated its policy on collecting defaulted loans, as reported in Crowd Fund Insider. In the event of default, the ownership of the loan is transferred back to Bondora, but with certain assurances for the investor. If Bondora goes bust, the investor will recover ownership of the loan, not Bondora’s creditors. Bondora passes on any fulfilment of the defaulter’s claim and does the leg work in terms of collecting payments – of course for a fee.
In another step, Bondora, which also operates in the UK, has stated that it is partnering with "internationally recognised" debt collectors that operate in the same countries as they do. The laws in this area can vary from country to country, so country specific expertise is important. Bondora is hoping that these debt collectors can offer a more effective service than their last strategy - where all defaults were sent to court: a costly and lengthy process.
Bondora CEO - Partel Tomberg - commented on the change:
"The structure we used was not similar to other platforms regulated by the FCA"
The CEO went on to point out some key advantages of the new system:
Back in March, when Bondora announced their series A financing round, Partel boldly announced:
“There are no precedents in the world on many of the things we want to do.”
It appears that this is one area where the Estonian platform no longer sees its divergent approach as a strength.
It was at the time of the platform’s Series A announcement that the Bondora boss pledged their €5 million worth of new funds to improving the infrastructure of their cross border lending model, in a move to expand operations. Evidently this is working, with the platform's volume increasing from €35 million to €60 in four months, according to the Liberum AltFi Volume Index Continental Europe.
Bondora has international plans, and that brings scrutiny. Whilst disruptors, by their nature, are looking to innovate - it is probably wise that their debt recollection strategy is not the place to do this. If Bondora is looking to expand throughout Europe (and beyond), then maximising efficiency will be one of the keys to success.