Our first line of defence is data, financial and operational. Understanding the terms of sale and current status for all customers is critical for handling complaints, fairly and timely.

We worked very closely with SDC over the last 12 months. The latest operational data from SDC UK was sent to us in early December 2023. We use the data to calculate section 75 liabilities for our Lenders, with high confidence.

Our second line of defence, which complements the first one, are Tabeo’s Merchant T&C. The latter provide us and our lending partners with important rights.

For example, we could suspend, or reduce, pay-outs to a merchant if we consider them at risk (acting reasonably). This is a well known tool (‘reserves’) available to and used by all major card processors. Any resulting cash balance is held in ring fenced accounts. We can set off liabilities arising from a default against those reserves as Tabeo or its Lenders incur them.

Our third line of defence is team, technology and sector expertise. We can handle an event with the scale of SDC without disruption to our business. Past events taught us valuable lessons. In 2020, Tabeo managed the default of FrankSmile and YourSmileDirect, at the time our 2 largest merchants. In 2022, with the default of WonderSmile, we had our first chance to test our learnings.

For example, for merchants like SDC, we link pay-outs to shipment confirmation via API including tracking number. Tabeo reviewed and updated its Merchant T&C in 2021 to reflect the lessons from 2020. Finally, we review the FAQ, website and terms of sale for providers like SDC to ensure that they are clear and not misleading for customers. We always insist that potential liabilities can be identified and easily calculated.

All three lines of defence are important in the case of SDC.