Improving the accuracy of the Provision Fund coverage ratio
By RateSetter Notices | Wed 2 Sep 15
By RateSetter Notices | Wed 2 Sep 15
We pioneered the introduction of the Provision Fund which has ensured that no individual RateSetter investor has ever lost a penny – a unique track record of which we are very proud. The Provision Fund has grown significantly over time and now stands at £15.5m.
The coverage ratio is a real time measure of the size of the Provision Fund relative to an estimate of the future claims that could be made against it. Today we have made a minor adjustment to the way estimated expected losses are calculated, to make it more accurate. Improving data and experience of RateSetter-specific customer behaviour in repaying loans means we periodically review our forecast of future claims and therefore the coverage ratio. The result is that we can be more accurate in our projections for the claims likely to be made on the Provision Fund, which has led to an increase in the coverage ratio - however, we always maintain a degree of prudence so that we never knowingly underestimate the claims that could be made.
For more information on the Provision Fund click here.
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