Whatever happened to RateSetter?

The RateSetter website currently bears the epitaph: We are no longer accepting applications for personal loans. We apologise for any inconvenience.

The site looks to have been changed at some point between 28 November and 19 December last year, according to the website archive, Wayback Machine.

We know Metro Bank specialises in its own unique brand of chaos, but did I miss something here?

The back story

RateSetter was acquired by Metro Bank in the summer of 2020. The price was quoted as up to ￡12.5m, but was likely to have been only around ￡2.5m in cash. There was more than an inkling of it being a distress sale following a series of difficulties with problem loans and then liquidity issues exacerbated by Covid.

The intention was that RateSetter would act as a white label for Metro Bank to do unsecured personal loans through its stores and online.

More recently

Early steps where taken to strip the business back to its core. The troublesome car dealer finance portfolio was sold off to LE Capital in 2021 and the property loan portfolio was acquired by Shawbrook Bank.

Various news releases then followed about RateSetter loans boosting the balance sheet and narrowing losses at Metro Bank.

As recently as January 2023, Metro announced it was entering the vehicle finance market with a digital car loan product using the RateSetter brand and technology.

A new Managing Director of Consumer Finance, company man, Richard Saulet, was appointed in February last year. At the time of the announcement, RateSetter was noted as a brand under his wing and something that he was keen to develop.

There was life still in the patient in September 2023, when Metro said it was launching a fixed-term savings product under the RateSetter brand - an easy-access account with 5.06% returns, available exclusively through the Hargreaves Lansdown Active Savings platform. The account is no longer listed.

Everything appears to have turned to dust.

The people

And what of the people?

CEO and co-founder Rhydian Lewis, who was awarded an OBE for his achievements at RateSetter, went over to Metro on the acquisition and left in April 2023. He is now serving out a non-compete notice period until 2024, and seeking out advisory roles in the meantime.

His fellow co-founder, Peter Behrens also went over to Metro, but left much earlier in December 2021. He is now an NED at Plenti, a P2P lender in Australia with a creditable ￡1bn loan portfolio. He is also founder of Hexla, which is "driving the global energy transition to clean hydrogen" according to its one-page website.

A shame and a waste?

I don't know about you, but to me, the whole thing has a feeling of being an awful waste.

Nobody ever said that business was easy, and natural selection is part of the process, but RateSetter, along with Zopa and Funding Circle, was part of the holy trinity of the P2P lending revolution. The purple brand looked to have generated enough momentum to become a fixture in the financial services landscape.

But bigger lenders than RateSetter have run into trouble in the past, and when it happened at RateSetter, Metro looked to have got itself a steal.

So why, less than three and half years later, would Metro withdraw from offering personal loans altogether? Personal loan lending is one of the simpler forms of personal finance and conventionally less risky than overdrafts or credit cards, which are now the only two lending products promoted on the Metro Bank website.

A vanilla product, a platform to deliver it on, a well recognised brand, and some clever people (at least to start with) - nah, ditch it.

Only at Metro Bank.

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