The RateSetter Provision Fund

In 2010 we set out to ensure not one single solitary saver lost even so much as one penny lending through RateSetter. £336,774,310 later we’re proud to say not one of our 15,164 lenders has.

Discover the Provision Fund

How much is in the Provision Fund?

Capital and interest returned
Provision fund stamp

Popular questions

Where does the money come from?

Where is the Provision Fund held?

How quickly am I covered?

Is the Provision Fund covered by the FSCS?

Does the Provision Fund diversify my risks?

“The Provision Fund is a differentiator and very reassuring. The people behind RateSetter have really thought about what is important to savers.”

How the RateSetter Provision Fund works...

provision fund illustration

"It’s not no risk, but it is less risk"

It's true, savings at RateSetter are not guaranteed or FSCS protected; instead, we introduced the concept of a “Provision Fund” to provision for risk ensuring the rates you can earn remain competitive.

100% original

RateSetter was the very first P2P lender in the world to introduce such a “Provision Fund” to protect savers' money.

Unsurprisingly – and, to be perfectly honest, quite flattering as well – a lot of imitators have emerged. Many even offer their own versions of our fund (some even calling it the Provision Fund). But none match our scale, sophistication or performance history. We should be pretty chuffed right?

The biggest risk is believing 100% is enough

We rather like our 100% record and our savers like it even more but it’s one thing to achieve such a record and another to keep it.

That said we’ve become pretty attached to it so we decided 12 months ago that we would work to set a new standard in the P2P sector just as we did with the Provision Fund back in 2010.

How do you improve on 100%?

We didn't improve one thing by 100%, we improved one hundred things by 1%. OK some things we improved a lot more than just 1% but you get the idea.

Read more about our three guiding principles that define our lending philosophy in the Provision Fund interactive brochure.

Learn about the guiding principles

How much do we estimate the Fund will pay out?

Provision fund stamp

The loans outstanding and backed by the Provision Fund amount to £211,588,862

Based on our analysis and experience, we estimate claims of £3,467,114. See historical performance.

Therefore the Provision Fund "Coverage Ratio" is:

Coverage Ratio
226 %
“You have a choice of both the duration of lending and also the yield which you wish to achieve.
Most importantly, RateSetter is the only operator to have returned all their funds to every lender.”

Popular questions


Where does the money come from?

The money in the Provision Fund comes from fees paid by borrowers as part of their loan. Every borrower pays a fee - called the "credit rate fee" - which is determined by a number of factors, such as their credit rating from independent credit reference agencies.

RateSetter takes a cautious approach to approving who can borrow through RateSetter and aims to ensure enough money is put into the Provision Fund to comfortably cover estimated claims (figure above).

To read about our stress testing scenarios to ensure there is always enough money in the Provision Fund, click here to open the interactive brochure.

Who does the Provision Fund belong to?

The Provision Fund belongs to our savers and the money is held in trust for our savers. The money is legally segregated and is therefore completely separate from RateSetter’s business assets.

How quickly am I covered?

If one of your borrowers is late paying or defaults on a loan then a claim is made to the Provision Fund immediately by RateSetter on your behalf. The system works in real-time with the aim that there is no delay in repayments to your account.

Is the Provision Fund covered by the FSCS?

Saving at RateSetter is not covered by the Financial Services Compensation Scheme (which covers savings accounts up to a limit of £85,000). While this would provide peace of mind the FSCS comes at cost to the saver, reflected in lower rates of typical savings accounts. To continue to offer competitive rates of return it is important we focus on building a stronger Provision Fund.

Does the Provision Fund diversify my risks?

Yes, it does. Because all of your savings are automatically protected by the Provision Fund your risk is really diversified by the strength of the Provision Fund as opposed to the individual borrowers that you are matched with.

Typically, RateSetter savers end up with multiple loans anyway but the key point is that the Provision Fund has the effect of diversifying your risk across the entire loan book.

Want to learn more about how the Provision Fund works, view the interactive brochure here.

"I think RateSetter has a great business model which has been well thought through.
I take great comfort from the Provision Fund."

The Principles of the Provision Fund

The Provision Fund is a trust on behalf of the Lenders, held by RateSetter. This means, like all customer funds, it is ring-fenced from RateSetter’s day to day operations. The Provision Fund has a set of Principles which determines how it is treated.

Principles of the Provision Fund
This sets out the principles behind the management of the Provision Fund.
  1. The Provision Fund is managed by RateSetter in the interest of all of RateSetter’s Lenders.
  2. RateSetter’s single overriding principle is that the Provision Fund is managed with the intention that all Lenders receive all capital and interest repayments due to them.
  3. In the case of a late payment or a default, the Provision Fund has a Standard Management process:
    • a. A claim is automatically submitted by RateSetter to the Provision Fund.
    • b. The Provision Fund will consider the claim and, in accordance with the second principle, recompense the Lender.
    • c. In the case of a default, all monies recovered by the Debt Recovery process (after costs) will be transferred back to the Provision Fund.
  4. In the unlikely event of a significant run of claims that threatens the capitalisation of the Provision Fund, the Fund will transfer to Active Management.
  5. In this situation, RateSetter will provide Active Management of the Provision Fund with three principles governing the consideration of claims submitted to the Fund:
    • a. To provide the most equitable management of the Fund in the interests of all affected Lenders.
    • b. That payment of affected Lenders’ capital will take precedence over payment of interest.
    • c. That the Provision Fund will not return to Standard Management until all defaulted Lenders have received their capital.