Transferring out of Ratesetter

txjockey

Hi guys, apologies if this has been asked elsewhere, if it has I cant find it. Given the situation we find ourselves in I find myself quite worried about the safety of nearly £75k held with Ratesetter. I have decided therefore I want to initiate a transfer of my ISA to and FCSC scheme. Now my understanding is that if I do this it has to be done within a reasonable time of about 2 weeks, of course this is not likely to happen as they are taking 1 month to deal with withdrawal / transfer requests at the moment. Do they have to transfer out within the time period ? If so Id imagine I will lose some interest but my view is that the bulk of my money will then be safe, ie I wont lose it all.
Now I could be over reacting here, what do other investors with Ratesetter feel ? Personally they have not put a foot wrong since I have been with them but this delay and another little issue are making me very nervous.
Id appreciate any advice and guidance please. Thanks.....Ken

eskbanker

txjockey said:

I have decided therefore I want to initiate a transfer of my ISA to and FCSC scheme. Now my understanding is that if I do this it has to be done within a reasonable time of about 2 weeks

What specific sort of transfer do you have in mind (i.e. what do you mean by 'FCSC scheme', as this [FSCS] is a compensation scheme not a product?) and where are you getting your timescale expectations from?

Alexland

I would also feel uncomfortable if I had money in a P2P right now but Ratesetter are probably one of the better ones. If you wanted to fully or partially transfer from their IFISA into a FSCS protected Cash ISA elsewhere you would first need to turn the P2P loans back to cash which I understand is the problem right now with a backlog of requests.

jonnygee2

Now my understanding is that if I do this it has to be done within a reasonable time of about 2 weeks

Where is this understanding from? I only have a small amount in Ratesetter, but I don't think that's how it works.

AFIK when you withdraw, they essentially just wait until someone else comes along to buy the loans. Given the financial crises, there are likely to be far more people selling than buying. I personally wouldn't expect to be able to sell ratesetter loans at the moment. I have also put mine to be withdrawn, but I wasn't really thinking it likely to actually happen. 

It does say in all the info on withdrawals that they are not guaranteed. 

masonic

txjockey said:

Do they have to transfer out within the time period ?

If you have uninvested cash that is available for withdrawal, then they have to transfer that cash out in a reasonable time period, normally a month is the guideline for non-cash ISA transfers, but with Covid-related delays the process could take considerably longer.

If you have money invested in P2P loans, then no they do not have to transfer those out, because they are illiquid assets which can only be sold subject to other investors being willing to take your place. No other ISA provider is going to be willing to accept a transfer that includes Ratesetter P2P loans (unlike say a S&S ISA where investments can be transferred without selling them).

£75k invested in Ratesetter (as your only P2P exposure) could be ok, if you are an experienced investor and have other investments valued at £1.5 million or more and have a high risk tolerance. If not, you have probably invested well above your risk tolerance. I was not willing to take any chances with Ratesetter, so pulled the remainder of the money I held there, which had been gradually running down, at the first sign of trouble.

P2P investments come with a 100% loss potential, and substantial losses are being suffered by some investors in other P2P platforms currently in administration, but in all likelihood investors in Ratesetter would not lose all or even most of their investment if it gets into such difficulties. Hopefully it will avoid administration because, unlike savings and stockmarket investments, P2P investments do not have FSCS cover for administrator's fees, which therefore have to come out of investors' capital.