All three of the UK’s “big three” peer-to-peer lenders have now been authorised.
Peer-to-peer lending platform RateSetter has been granted full authorisation by the FCA, after nearly two years of waiting. With full authorisation in hand, RateSetter is now free to launch an Innovative Finance ISA offering, subject to approval from HMRC.
Whereas Zopa focuses wholly on consumer borrowers, and Funding Circle on businesses, RateSetter differs in that it lends to consumers, businesses and property developers. Zopa and Funding Circle’s investors bases are comprised of a mixture of institutional and individual investors, whereas RateSetter is almost entirely focused on individuals.
RateSetter also stands out from the trio in that its road to authorisation has been a bumpy one – which is perhaps reflected in the lateness of its authorisation (Zopa and Funding Circle were authorised in May).
The biggest bump came in July, when RateSetter offered its investors the option of selling out of their investments without incurring any fees, due to revelations about its past wholesale lending activities gone awry. Most notably, RateSetter was forced to put its balance sheet behind an advertising company named Adpod Limited – which had borrowed £12m from Vehicle Trading Group, a former wholesale lending partner – in order to absorb losses on behalf of investors. The platform withdrew from the Peer-to-Peer Finance Association soon after.
But RateSetter seems to have weathered the ensuing storm, and with around 250,000 active customers today, remains one of the UK’s largest fintech businesses.
“Authorisation has been a long but positive journey during which we have learnt a lot, improved our infrastructure and implemented important changes, notably making the business more transparent,” said RateSetter founder and CEO Rhydian Lewis (pictured). “Transparency is vital to our business because our customers need to understand what we do to appreciate the risk of lending on RateSetter.”
“Authorisation is a milestone but not an end in itself and we look forward to working with the regulator and all stakeholders to continue to deliver good customer outcomes and to grow RateSetter.”