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Platform Analysis: RateSetter

Key Information

Founded:
November 2009
Company No:
7075786
FCA Permission:
Fully Authorised
FCA Number:
633741

Account Details

Account Types:
General Investment Account (GIA) and Innovative Finance ISA (IFISA)
IFISA Status:
Available
Investment Structure/Bid Type:
Autobid
Loan Type:
Consumer, Property, Business

Product Name

Rolling Market

Investors are matched to loans with terms between 6 months and 5 years. Investors can access their money freely as long as there are funds on the market to replace the commitments. If there are not, borrowers will repay throughout the term.

Product Details

Term:
Ongoing
Min Investment:
£10
Max Investment:
No Max
Advertised Rate:
2.8%

Product Name

1 Year Market

Investors are matched to loans with terms up to 1 year. To access funds early, investors will be charged an early withdrawal fee, reducing the interest earned to that of the Rolling Market.

Product Details

Term:
1 year
Min Investment:
£10
Max Investment:
No Max
Advertised Rate:
3.6%

Product Name

5 Year Market

Investors are matched to loans with terms up to 5 years. To access funds early, investors will be charged an early withdrawal fee, reducing the interest earned to that of the 1 Year or Rolling Market.

Product Details

Term:
5 years
Min Investment:
£10
Max Investment:
No Max
Advertised Rate:
5.2%

Actual Net Returns v Estimated

Actual Default v Estimated Bad Debt v Actual Bad Debt

Amount Lent & AUM

Investor Type

Loan Purpose

Loan Region

WEIGHTED BORROWER RATE

Year Min Borrower Rate Average Borrower Rate Max Borrower Rate
20102.3%6.3%11.75%
20113.91%8.06%29.69%
20122.8%7.15%19.28%
20131.94%6.19%26.97%
20141.45%7.29%70.71%
20151.57%6.98%42.24%
20162.06%6.52%73.92%
20171.69%5.8%43.74%
20180.96%5.87%40.92%

WEIGHTED LOAN AMOUNT

Year Min Loan Amount Average Loan Amount Max Loan Amount
2010£95.00£4,501.13£30,715.00
2011£324.84£3,626.15£25,580.00
2012£926.30£4,565.00£37,075.00
2013£74.20£7,621.06£261,250.00
2014£22.53£5,139.36£1,507,500.00
2015£51.94£4,324.27£1,597,500.00
2016£5.79£4,423.65£1,414,000.00
2017£15.02£4,809.24£1,951,157.48
2018£6.95£4,358.46£1,309,556.00

Financial Summary

31st December 2016 31st December 2015
Revenue £18,458,205 £12,571,797
Loss -£4,447,613 £435,852
Net Assets £24,112,287 £28,122,808
Cash Position £15,394,441 £25,821,535

RateSetter’s revenue increased 47% in 2016, driven by increased value of loan originations. RateSetter is still operating at a loss due to investment in growth objectives.

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Overview

RateSetter is a peer to peer lending platform that matches investors with consumers, businesses, and property developers borrowing funds. The RateSetter ‘provision fund’ is pivotal to the RateSetter offering and has covered all borrower defaults to-date. RateSetter claims that no capital has been lost since platform formation.

Risk and Security

RateSetter manages investors’ credit risk through initial credit risk assessment and arrears management. Protection is further provided by the provision fund which is expected to cover any losses, ensuring no investor loses capital.

Default Recovery

The provision fund reimburses investors in the event of defaulted loans. Any recoveries are credited to the provision fund. If the fund runs out and can’t cover losses, RateSetter will activate a ‘Resolution Event’ where all outstanding loan contracts are pooled together into a central pot and investors are paid back on a pro-rata basis. Ultimately, this means investors are exposed to every outstanding loan on the loan book and not to their specific P2P loan contracts.

Withdrawing Funds

Providing there are new investors on the RateSetter ‘Markets’, current investors with RateSetter can withdraw their funds before the end of their term. The Rolling Market product has no fee attached to accessing funds early. When investing in the 1 Year or 5 Year Markets, there will be a charge for accessing money early. The actual fee depends on individual investing circumstances.

Platform Failure

If RateSetter were to enter into administration, the loan contracts between investors and borrowers would still exist. RateSetter has a fully funded plan in place to continue the facilitation of payments from borrowers to investors. This is funded by a combination of the income generated from the loans, plus any shareholder capital required.

View Orca’s RateSetter Review