In the interview, Rhydian explains how the UK industry has set itself up for sustainable growth. The key things which set the UK industry apart are:
Focus on individual investors
RateSetter has deliberately focused on attracting retail investors rather than institutional investors such as hedge funds. In practice, this means that 96 per cent of money lent via our platform comes from ordinary investors - individuals, businesses, schools and charities.
That means that we’ve grown more modestly than some US platforms which have far higher levels of institutional involvement, but over the long term, that growth is proving more sustainable.
That long term outlook is also reflected in the way RateSetter charges fees to borrowers. Rather than charging all fees at the start of the loan, we have started to spread fees over the lifetime of loans. In practice, this means that we are not under constant pressure to write new loans in order to earn an income. As such, we are incentivised to write loans that pay back in full, giving us what's known in the industry as "skin in the game" and ensuring that we lend prudently, for the long term.
RateSetter, and the UK peer-to-peer lending industry in general, is regulated by the Financial Conduct Authority (FCA). We actively sought to be brought into regulation, and prior to becoming regulated in 2014, we co-founded the P2P Finance Association, a trade body which sets best practice standards in our industry.
We proactively publish a significant amount of information, including our full loan book, data on loan performance and returns. We continually look for new ways to enhance our transparency.
You can watch the Bloomberg interview in full here.