By Karoliina Liimatainen on 15th May 2018
A fund set by the P2P lender has so far efficiently protected investors against losses from bad loans.
A peer-to-peer lending platform RateSetter has generated over £100m in pre-tax interest payments for its investors since its launching in October 2010.
“This is just the start. We are opening lending as an asset class that everyone can access – filling the gap between the low returns of cash deposits and the volatility of shares,” said Rhydian Lewis, the CEO and founder of RateSetter.
No investor has so far suffered a loss on the lending platform. This is due to RateSetter's invention of Provision Fund, which spreads the risk across the whole loan pool.
All RateSetter borrowers are required to pay into the fund and, in the case of a missed payment, the fund steps in and reimburses the investor. If the level of non-performing loans stays low, the fund works as a buffer against losses although the risk of losing your money is still real.
According to RateSetter, it now has over 500,000 customers – more than any other British P2P lender. Its 60,000 investors have lent almost £2.5bn to 450,000 individuals and businesses across the country.
RateSetter has received a boost from its Innovative Finance ISA, which it started to offer in February this year. In three months, the company has received more than £80m in IFISA subscriptions from 10,000 investors.
Now in its sixth year, the AltFi London Summit returns on 18th March 2019 to 155 Bishopsgate. Last year proved to be a crucial turning point for the key players building the future of finance. Leading platforms launched oversubscribed IPOs, digital banks proliferated and mainstream financial institutions started their own disruptive propositions. With 2019 certain to be another landmark year, more questions will be asked by regulators with investor interest in disruption also poised for more rapid growth.