Ablrate enters solvent wind-down – Peer2Peer Finance News



Ablrate is entering into a solvent wind-down, blaming the economic outlook, “challenges on our loanbook” and the regulatory trajectory.

The asset-backed peer-to-peer lending platform officially launched on 14 July 2014, making it one of the more established players in the P2P space.

In an emailed update to investors, Ablrate said that it is “not going out of business” and that this has been a voluntary restriction it has placed on itself.

It is not taking on new customers and has notified the Financial Conduct Authority (FCA) of the planned wind-down.

It said it will continue to work until the loanbook is settled.

“Our lenders have always been the number one priority, therefore we are absolutely committed to winding down the loanbook in an efficient manner with the best outcome for lenders,” Ablrate chief executive David Bradley-Ward told Peer2Peer Finance News via email.

“Much of the book will roll off naturally in the next 12 to 18 months, and we have done a huge amount of work on loans including assisting with a £5.1m financing to complete a project. There is more to do, but we are in dialogue with borrowers and are at an advanced stage of getting things sorted with most of the book. We are also looking at alternative methods of trading loans that have a longer run-off.”

Bradley-Ward said Ablrate has engaged compliance consultancy Thistle to assist with its wind-down plan.

Read more: Ablrate “may not be able to offer” secondary market again

Ablrate said the decision to wind down the platform was due to a combination of factors. Firstly, it noted the “challenging environment for small businesses” due to rising interest rates and inflation, warning that the “volatility of the economy” added additional risk to Ablrate’s lenders and its business.

Ablrate also said that an element of its loanbook “has seen some challenges” and that it spent a huge amount of time servicing a few of the borrowers. “Fortunately, we have stabilised some loans and we can see the light on the servicing and settlement of some of these loans,” it said.

Ablrate said there are loans from a small number of borrowers that it has not been able to recover and so has passed collection on to insolvency specialists.

And finally, Ablrate blamed the regulatory environment for its decision to wind down. The City watchdog has proposed stricter rules for financial promotion of “high risk” investments, including P2P lending.

“Our opinion, having read the consultation documents, is that the trajectory of regulation is more restrictions, more complex platform reporting to prove those restrictions are working and, one would assume, if they are not working to the regulators’ stated goals then further restrictions will apply,” Ablrate said.

Read more: The new normal: Special report on P2P business lending

“If the proposed ruling of banning incentives to invest comes to pass, our opinion is that it is likely that Instant Returns would be banned, of which borrowers have paid over £200,000 since it was implemented. Put all this together and, commercially, it is a difficult circle to square as it is uncertain where that trajectory ends.”

Instant Returns was an Ablrate function whereby investors started earning income on certain loans as soon as they bid, before the loan had been filled or the legal documents were completed.

“The P2P space has been good to us, operating Ablrate has given us the opportunity to work with a fantastic group of clients but also, over the last few years, with other companies and team members who are on the cutting edge of financial technology,” said Bradley-Ward. “This new era of financial technology is innovating everything from debt to equity, funds and beyond and, as such, we think that is the place to be. I am sure, in a few years’ time, that many P2P platforms will be able to benefit from those technologies also as we use our P2P experience to assist building out those technologies.”

Ablrate said investors can continue to access their account in the normal manner but as it will no longer be offering new loans, it is encouraging them to withdraw any surplus cash balance on their account.

Standard monthly interest, capital and interest, and settlement payments will continue to be credited to investors’ accounts upon receipt from the borrowers in the normal way.

Read more: Industry braces itself for more investor restrictions

Investors wishing to withdraw any cash balance from an Innovative Finance ISA (IFISA) account to their designated bank account should follow the normal withdrawal process, Ablrate said, although it highlighted that this would result in the loss of the tax-free wrapper.

To maintain the ISA wrapper, cash can be transferred out to a new ISA provider, Ablrate said.

Ablrate will waive its standard fee and cover the cost of the first transfer out from investors’ IFISA accounts in each financial year, and thereafter its usual charge will apply.

Are you an Ablrate investor? Where are you planning to put your funds next? Email us directly at info@p2pfinancenews.co.uk.