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RateSetter's provision fund tops £1million
RateSetter, the UK's second largest peer-to-peer company specializing in personal loans, has announced this week that its provision fund - the pot of money that will repay lenders if their borrower defaults - has passed the £1million mark.
With RateSetter's £47million on loan and a current lifetime bad debt rate of only 0.36%, the provision fund would cover future bad debt 6 times over. If bad debt were to rise to RateSetter's estimate of 1.4% the provision fund would still reimburse lenders with a significant amount of money to spare. RateSetter have been very transparent with the data concerning their provision fund, and have the motto "Every Lender, Every Penny" as, to-date, no lender has suffered any loss to their capital.
Zopa, the UK's largest peer-to-peer company recently announced their SafeGuard product, which works in a very similar way to RateSetter's provision fund. It is also expected that some new entrants will offer similar products.