RateSetter has withdrawn from the Peer to Peer Finance (P2P) Association after breaching its transparency rules.
Ratestter made the announcement in a statement “We have decided to withdraw from the Peer to Peer Finance Association. No customer has experienced any loss from our actions but we recognise that our actions breached the principles of the Association. No customer has experienced any loss from our actions but we recognise that our actions breached the principles of the Association.”
The breach came when RateSetter’s wholesale loans to three companies started failing. Adpod, a now-bankrupt subsidiary of the Vehicle Trading Group, to which RateSetter had lent £12 million, was one of the companies. RateSetter chose to absorb Adpod’s losses and acquire a controlling stake in the company instead of using its provision fund – a pool of money it uses to shield its lenders when borrowers default – but failed to share this information immediately.
The Peer-to-Peer Finance Association represents three-quarters of the P2P lending market in the UK. RateSetter was a founding member of the association.