UK-based peer-to-peer lender RateSetter announced on Tuesday it completed two sales of non-performing loans, with the combined proceeds of £4.65m added into the Provision Fund. According to RateSetter, the debt sale process started in December 2019 and the lender was not needing to reduce its price expectations despite the global coronavirus pandemic.
While sharing more details about the sale, the RateSetter team stated they always do what we can to support borrowers, but sometimes a borrower is unable to repay their loan, so the Provision Fund steps in to return the outstanding capital to investors.
“RateSetter’s Customer Operations team in Leicester then works closely with the borrower to put in place an appropriate repayment plan to recover as much of the outstanding money for the Provision Fund as possible. However, sometimes we are unable to increase the recoveries further and so, when we have used all the options available to us, the best way forward is to turn to a specialist debt management company who will purchase the loans with proceeds going to the Provision Fund.”
RateSetter then explained the debt sold comprises loans written across all years of lending, where it has exhausted the collections and recoveries processes available to the lending platform. The lender added:
“RateSetter always strives to ensure that borrowers are treated fairly, and we are at the forefront of best practice with regards to vulnerable customers. That is why we only sell debt to FCA-regulated specialist debt management companies that can demonstrate to us that they are responsible and operate with sensitivity and fairness to customers.”
RateSetter noted that it does NOT take any revenue from the debt sale and all proceeds go into the Provision Fund.