Ratesetter - is my money safe!

WillArkwright

Ratesetter have announced they will take all interest from your investment above 2%(In my case they are taking 4%pa). That is wholly not fair and reasonable AND is this money really being taken to support their failing business. Money saving Expert and the media seem very quiet on the subject!!!! If I try to withdraw my money will I  1. See the money returned this year? Or 2 Ever?

Gizmo70

WillArkwright said:

Ratesetter have announced they will take all interest from your investment above 2%(In my case they are taking 4%pa). That is wholly not fair and reasonable AND is this money really being taken to support their failing business. Money saving Expert and the media seem very quiet on the subject!!!! If I try to withdraw my money will I  1. See the money returned this year? Or 2 Ever?

It seems completely fair and reasonable. I believe they are using any interest paid by borrowers above the 2% threshold to top up the provision fund which might be used for those loans that default. This is no different to other financial institutions cutting their interest rates following the BoE decision or companies cutting their dividend. It should be expected during the current economic conditions.

Alexland

The money was never 'safe' it was always an investment in both the stability of their platform and the underlying loans.

xnoxxnox

WillArkwright said:

Ratesetter have announced they will take all interest from your investment above 2%(In my case they are taking 4%pa). That is wholly not fair and reasonable AND is this money really being taken to support their failing business. Money saving Expert and the media seem very quiet on the subject!!!! If I try to withdraw my money will I  1. See the money returned this year? Or 2 Ever?

Your statements are factually incorrect.
If you open up individual loan you can see that for example borrower is paying 11.4% of which only 3% is paid to the lender. Some of it goes to ratesetter. The rest goes to the provision fund.

Provision fund is there to spread the risk among borrowers, to ensure that if some contracts fail to pay back, all lenders together have slightly less losses. But not illiminate losses.

Ratesetter is not a cash ISA, and your money has always been at risk.

They only tweaked the balance of interest paid out to lenders now, versus later via provision fund. Some of the interest has always been set aside for the provision fund, now it's slightly more.

They are increasing provision fund by half of interest paid to the lender. It is not "everything above 2%". I.e. I have contracts that pay out 5% interest, and from now on will pay me 2.5% whilst the rest will be there for me in the provision fund if my contracts fail to pay me.

Finally one can always loose money with bonds. And it has nothing to do with ratesetter or their failing or successful business. A contract was made between you and a random borrower on the internet. As if, you agreed to lend your money to a fellow you saw at supermarket ones. And the fellow can pay less interest than expected, or stop paying altogether. You can demand early repayment, but it may or may not be fulfilled - it depends if the fellow can find to borrow money from someone else to pay you back and continue repayments to a new lender. Just because you want your lent money back, does immediately forces someone else to lend money to your fellow. And if ratesetter stops facilitating repayments - it will be up to you to get in touch with your borrowers to collect repayments.

You did not lend money to Ratesetter company, and Ratesetter company did not borrow the money from you. Ratesetter is just a supermarket where you met the fellow, and where you agreed to meet up to collect repayments.

One can loose money with any bonds. I.e. currently many bonds have negative yield, meaning you lend £110 quid, only to get £90 back in capital and £10 of interest which in total is less than original money spent! Because certain bonds have what is called negative yield. Another scenario is investing in Argentina government bonds, that have simply stopped paying despite the bond having 100 year term.

Early release of money - look at the term of contracts you have issued, you can wait until they all lapse. This is ultimately how long you have agreed to keep money locked up. You can choose to stop reinvesting any repayments - set the desired rate as high as possible, and withdraw any money that are on market. Submit an offer to sell your contracts to any other investors and wait until somebody will be happy to become the lender instead of you. This is currently done in chronological order.