RateSetter is a British peer to peer lending company, based in Southwark, London. It is the first company to have introduced the concept of a “Provision Fund” into peer to peer lending. It is a founding member of the P2P Finance Association, the first trade association for the peer to peer finance industry (ref: p2p Finance Association). Launched in October 2010, the company has matched over £11m in peer to peer loans between borrowers and lenders.

History

RateSetter’s holding company, Retail Money Market Ltd, was first incorporated in October 2009 by Rhydian Lewis, an investment banker from Lazard, and Peter Behrens, formerly of Royal Bank of Scotland. The company was privately funded by entrepreneurs from start-up, and has completed three rounds of funding, the most recent in November 2011..

Products

RateSetter is based on the principle of an Exchange (organized market)

Exchange (organized market)

An exchange is a highly organized market where tradable securities, commodities, foreign exchange, futures, and options contracts are sold and bought.-Description:...

, with Borrowers and Lenders competing for matched loans based on price, with both sides of the market able to set the rate at which they are happy to be matched. RateSetter has two markets for Lenders to participate in: a 3 Year Fixed Amortizing Loan*, or a Rolling Loan, which is a Variable Rate Loan..

Borrowers can apply for a 3 Year Loan at a rate fixed from the 3 Year Loan market, or from three to twenty four month variable rate loans based on the Rolling market. The company has strict lending criteria, only accepting between 12 and 15 per cent of borrower applications.

Provision Fund

RateSetter is notable in peer to peer finance for introducing the concept of a “Provision Fund” for Bad Debt, which the company claims is a “more efficient way to diversify risk”. The Provision Fund is a capital sum, generated by Borrowers’ payment of a “Credit Rate” fee based on their financial credit history. This fund is called upon to reimburse Lenders in the event of a late payment or default. The company claims that the Provision Fund has allowed them to return all the expected capital and interest to its Lenders, a claim they believe to be unique in peer to peer. .

Technology & Patents

RateSetter’s technology was shortlisted for Credit Today’s Best Use of Technology Award in 2011.

RateSetter has patents pending for its matching process, which it claims is an innovative method of matching real APRs that Borrowers pay with the returns that Lenders achieve.