Since 4 May 2020 investors have only been receiving 50% of interest, with the other 50% going to the Provision Fund, for the protection of all investors. This will be the case until further notice and reviewed every quarter. Also, the time it is taking investors to access their funds is taking longer than usual.
RateSetter statistics.
This page is updated in the last week of each month with data correct as of the start of that month.
Latest update: December 2020.
RateSetter to date in figures
Key figures
Investor returns
RateSetter generally expects that investments will earn the advertised rate, however all returns will be reduced by 50% during the Temporary Interest Reduction. Some borrowers may fail to make repayments, but while the Provision Fund maintains a capital coverage ratio over 100% it is likely to be able to repay capital in full. If an investment is held within an Everyday account, interest earned is taxable income, but may be tax-free under the Personal Savings Allowance. If an investment is not in the Access product, there may be a fee to release that investment.
Lending volume
The graph below shows how much has been lent through RateSetter and how much is still left to repay.
The Provision Fund
Definitions
Provision Fund cash
Borrower contributions to the Provision Fund received to date, minus losses to date.
Expected Future Provision Fund Inflows
Borrower contributions to the Provision Fund due over the lifetime of active loans, discounted to reflect early payments and losses.
Provision Fund Buffer
Contributions already received, plus Expected Future Provision Fund Inflows.
Expected Future Investor Interest
Interest payments from borrowers to investors expected to be received over the lifetime of active loans, discounted for early payments and losses.
Expected Future Losses
Expected future losses on active loans covered by the Provision Fund.
Capital Buffer
Provision Fund buffer, plus expected future interest.
The Provision Fund we offer does not give you a right to a payment so you may not receive a pay-out even if you suffer loss. The Fund has absolute discretion as to the amount that may be paid, including making no payment at all. Therefore, investors should not rely on possible pay-outs from the Provision Fund when considering whether or how much to invest. Learn more
How expected losses are calculated and validated
The expected losses are estimated based on quantitative analysis of actual loss data.
- Quarterly review: Expected losses on active loans are recalculated by our risk assessment experts every three months. The expected losses are estimated based on quantitative analysis of historical lending using industry standard techniques. For recent lending, we look at early arrears data to inform the decision around lifetime expected losses.
- Executive Credit Committee: The expected credit losses update is signed off at the Executive Credit Committee which is comprised of the CEO, COO, CCO, CCO and Head of Compliance and Enterprise Risk.
- Board Risk Committee: The Board Risk Committee is responsible for signing off the methodology used in arriving at an expected losses calculation.
The Provision Fund risk indicator
Provision Fund coverage and forecasts
When we underwrite a loan, we assess the likelihood of that loan not being repaid in full. We call this figure Expected Loss. This assessment helps us to put aside the right amount of money in the Provision Fund to reimburse investors in the event of that loan not repaying.
Important things to remember:
- Expected loss is not a loss to your investment. It is the amount that we expect will not be repaid by borrowers across the whole portfolio, therefore the amount that may need to be reimbursed to investors by the Provision Fund.
- At RateSetter the Provision Fund spreads the risk of each investment across the entire portfolio of loans. This means that your investment will perform in the same way, no matter which loans you are matched to.
We revise and published our estimates on a quarterly basis. Past performance is not an indicator of future results.