RateSetter's 100% fund

April 16th, 2014
RateSetter

RateSetter was the first peer-to-peer company to introduce the concept of provision fund to protect lenders where a borrower is unable to repay a loan.  This is a fund that would step in and reimburse lenders all outstanding capital and interest, and then chase the borrower for repayment.  All borrowers pay into this fund by means of a fee when they take out a loan.

This provision fund has today been re-branded as the 100% Fund.  This is to highlight that while there is no Financial Services Compensation Scheme (FSCS), RateSetter has been able to ensure that all lenders have received back every penny they have lent.

Here is the full press release:

P2P pioneer RateSetter took to the streets of the capital to raise the issue of saver protection and promote the ground-breaking platform’s 100% Fund.

Bemused onlookers witnessed a man swaddled in bubble wrap rolling down stairs and facing a series of perilous challenges – including the daily struggle with tube doors. The stunt highlighted that, whilst the 100% Fund can’t protect you from everyday life, it does protect your money!

RateSetter believes the focus of the burgeoning peer-to-peer (P2P) industry post-regulation should be on ensuring no saver ever loses money, even if borrower defaults increase in a souring economy.

The platform’s Provision Fund is the most established in the industry, the largest at £4m, and boasts a 100% track record. None of its 11,500+ savers have lost a penny since RateSetter launched in 2010, despite over £210m having been lent out. This is a unique feat amongst the major P2P lenders.

In recognition of fundamental advancements that the platform has now made to continue this impressive achievement, RateSetter has renamed it as the 100% Fund.  These advancements include:

  1. Comprehensive coverage of current default rates of 0.47%. RateSetter believes any coverage below 150% is putting lenders at risk; it currently has over 180% coverage of likely borrower defaults and is due to hit 200% in 2014.
  2. A RateSetter Credit Committee to monitor borrower defaults in real time, which can vary borrower levies to bolster the 100% Fund if the overall default rate increases.
  3. 360 degree credit checks. New affordability, fraud, identity and third-party lender checks of its potential borrower-base in addition to industry standard credit checks.
  4. Immediate return of funds to lenders in the event of a borrower default. Swift repayments unlike secured lending.
  5. A Resolution Event to be activated if the 100% Fund is depleted, distributing pooled borrower repayments to lenders.
  6. A Fully Funded Run-Off Plan, approved by the regulator, to activate in the very unlikely event RateSetter ceases to trade. It will rapidly match borrower repayments with lenders via a segregated fund platform.

Rhydian Lewis, founder and CEO of RateSetter, said: “Our stunt highlighted a critical issue. We are at a cross roads in the P2P industry following regulation by the Financial Conduct Authority, but we need to move far beyond this if we are to put any saver anxiety over our sector to rest. As a recognised, regulated sector, savers and borrowers will continue to turn to P2P as a flexible and hassle-free alternative to the banking industry. But the individual platforms must go further to protect savers if the reputation of the industry is to flourish in the years to come.”

“With so many new entrants to the market offering negligible security to savers, we must draw a line in the sand now and call for all P2P players to step up their game to ensure our sector’s longevity. We need to provide an adequate level of safe, easily accessible funds if the sector is to attract the same numbers of savers as borrowers. Carefully vetting who is borrowing through our platforms is central to this.”

“Let customer protection be the lynchpin of our industry at this crucial time in our development. Everyday savers will ask for nothing less and we must rise to the challenge.”

Joe Levey, a RateSetter saver, added: “RateSetter recognises the fact that customer protection must be at the heart of P2P. The 100% Fund is testament to this and ensures that savers are fully protected from any potential borrower defaults. It is the reason why I am confident to put my money into the platform, and the characteristic that will continue to attract Britain’s hard-pressed savers!”

Recent figures released by the P2P Finance Association, of which RateSetter is a founding member, show there has been a dramatic uplift in borrowers in the P2P sector between January and March this year: they have risen by 17%, compared to a 5% rise in savers.

RateSetter took the crown of the largest peer-to-peer lender in the UK by the amount of new loans originated for the first time in March, with total inflows of £21,105,355. Its business grew at 219% in 2013 compared to overall sector growth of 107% (NESTA, Dec 2013), making it the fastest growing major peer-to-peer company in the UK.

RateSetter’s unique approach has led to widespread industry and customer accolades, with the company winning MoneyNet’s 2014 award for Best Peer-to-Peer Savings Provider, Credit Today’s 2013 award for Alternative Lender of the Year and Moneywise’s 2013 customer voted award for ‘UK’s Most Trusted Loan Provider’. RateSetter is also the most highly rated personal loan provider in the UK according to ReviewCentre.com, the leading independent UK consumer review site, with 99% of 619 customers saying they would recommend RateSetter to others – the highest of any financial service provider. 

Funding Circle launch first property loan

April 14th, 2014
Funding Circle

True to their word, Funding Circle have low launched their first property loan today.  This is an A+ risk band with a first charge on the property as security.  The interest rate is fixed at 8.5% for lenders, but Funding Circle are offering 2% cashback on this.  Lenders should act quickly as the loan in being filled at a rate of £70,000 per hour!

Here is the email Funding Circle sent on Friday:a rate of

Following Tuesday's email where we provided details of our first formalised property loan, we're pleased to tell you that this loan will be listed on the marketplace on Monday, 14th April.

We had hoped that "Property Investment in Surrey" would be available for you to lend to this week, but, due to a delay in receiving local searches on the property title from the local authority, we have decided to wait until the start of next week. We have now received the local searches, completing our due diligence for this loan.

We look forward to listing this loan on Monday and answering any questions you may have. And as a reminder to celebrate we’re offering 2% cashback* on your lending to this loan. Happy bidding!

RateSetter expands into Australia

April 9th, 2014
RateSetter

RateSetter, the 3rd largest peer-to-peer provider in the UK, is now expanding into Australia.  RateSetter launched the concept of the provision fund and has facilitated loans of £208million to date.  This move follows Funding Circle's expansion into the United States of America in 2013.

RateSetter will become only the second peer-to-peer provider in Australia, following SocietyOne, which launched in August 2012.

Here is the full press release:

RateSetter - one of the founders of the pioneering peer-to-peer sector in the UK – will expand its operations to Aussie shores in 2014 as the stepping stone to further launches in Asia.

It is also exploring launches in association with financial services partners closer to home in Europe.

Building on its UK success, in which it helped to create the Peer-to-Peer Finance Association, RateSetter has secured investment of $3m from local and international investors to kick-start its offering from its Sydney offices.

Headed by Daniel Foggo, a former banker with Barclays Capital and NM Rothschild in Sydney and London respectively, the company will be the only Australian P2P company offering market-beating savings rates to individuals who lend funds on its platform and accessible loan rates to everyday borrowers who are tired of banks’ hidden fees and profiteering.

RateSetter will go live in Australia  this summer. It will be the first P2P lender in Australia to be fully regulated from the outset, allowing all Australians to participate on its award-winning platform, not just professional investors.

RateSetter was also the first P2P lender to launch a ‘Provision Fund’ – the largest in the UK at £3.8m – to help protect savers’ funds in the event of a borrower default.  Many other platforms have followed but none can match RateSetter’s track record: every one of its 11,000+ savers has received every penny of capital and interest owed to them in the last three-and-a-half years since its launch. In March 2014, RateSetter also received the largest monthly inflows in the UK P2P sector.

Rhydian Lewis, founder and CEO of RateSetter, said: “When looking at international markets in which to expand, Australia was the obvious choice as it bears great similarity to the UK before the advent of P2P lending. Its saving and loans industry is ripe for disruption as banks have been offering below-par deals for too long with little true competition.”

“We have decided to focus on strategic growth markets such as Australia, which is a natural stepping stone to the huge opportunity in Asia. Targets closer to home on mainland Europe will not be overlooked, however, and initiatives there are already in train.”

“We want to empower savvy savers and borrowers by putting them in control of their finances through a simple, fair and flexible method of saving and borrowing. We hope they will follow in the footsteps of thousands of UK customers who have realised there is no need to take crumbs from the table of the banking industry when you can have your cake and eat it!”

Daniel Foggo, Chief Executive of RateSetter Australia, added: ‘“I worked in banks in the UK and Australia for over a decade and knew there had to be a better way to provide customers with a better rate and a better experience. When I met RateSetter, it was clear that is what they were doing and that Australia would be the perfect market for them to expand their international footprint. This offering will be extremely popular with everyday savers and borrowers, who are crying out for the advances seen in the UK P2P market.”

RateSetter’s unique approach has led to widespread industry and customer accolades in the UK, with the company winning MoneyNet’s 2014 award for Best Peer-to-Peer Savings Provider, Credit Today’s 2013 award for Alternative Lender of the Year and most importantly Moneywise’s 2013 customer voted award for ‘UK’s Most Trusted Loan Provider’. RateSetter is also the most highly rated personal loan provider in the UK according to ReviewCentre.com, the leading independent UK consumer review site, with 99% of 619 customers saying they would recommend RateSetter to others – the highest of any financial service provider.

 We wish RateSetter well down under!

Funding Circle cashback on property loan

April 8th, 2014
Funding Circle

Funding Circle, already offering a 1% cashback on all loans over £75,000, are now going to be introducing 2% cashback on a new commercial property loan.  The loan is at a fixed rate of 8.5% (before fees) which is comparable to the average lending rate in the A+ (lowest risk) market.

Here is a copy of the email from Funding Circle.  We have redacted the partnership name, the address and the link to the loan details, as this information was only shared with registered lenders.

Thank you for registering your interest in property finance loans at Funding Circle. As promised when you signed up, we have provided the details on the first formalised property loan going onto the marketplace. It will be listed this week.

Property Investment in Surrey

The partnership has owned and let the property for 54 years. The owners are now looking to borrow £265,200 to refinance a bank loan and release £64,000 in equity. It is a commercial investment loan with a 8.5% fixed rate (before fees) meaning that these loan parts will be auctioned on a first come, first served basis. You can download the full investor report [link removed], created by Funding Circle’s credit and property specialists.

Key features of the loan:

  • A+ commercial investment loan
  • 8.5% fixed rate (before fees)
  • 36 month loan term, with a 15 year amortisation schedule
  • £265,200 loan value
  • 36% Loan to value
  • Property located in Surrey
  • Owned and managed successfully by same landlord for 54 years. No significant period of tenancy vacancy to speak of
  • Current 2 main tenants have been in place for 10 and 20 years respectively
  • First charge security on the property
  • The monthly repayments will consist of interest and partial capital repayments, with a lump sum repayment of the balance at the end of the loan term
  • Cashback at 2% for investors

Autobid will continue to bid on all available loans on the marketplace, and should be turned off if you do not want to bid on these loans.

New lenders can also earn £40 for signing up through the P2P money cashback site when they have successfully loaned out £1000 or more (terms and conditions apply).

isePankur rebrands as Bondora

April 2nd, 2014
Bondora

The Estonian peer-to-peer provider isePankur has announced it is to rebrand as Bondora.  Here is the email that was sent to customers this morning:

During the last 5 years, more than 70,000 borrowers from 4 different countries came to isePankur seeking investors. Finally, our rapid development left no room for the brand to accommodate our further cross-border expansion. This is why today we are launching our new brand name - Bondora.

Like isePankur, Bondora continues to be a platform where you can apply for a loan, which is quick, secure and is optimal for you. The new brand name will cause no changes to your account, as you will be able to continue making repayments with the same email address and password on our new website www.bondora.com. Our old website www.isepankur.com will remain active for a limited time.

If you haven’t found financing previously, Bondora today has more investors than before and offers even simpler and more straightforward loan application process.

Full story »