Anyone taken out a loan on ratesetter?

RodneyCharltonTrotta

Anyone got any experience of using this company or similar companies at all?

Essentially from what I can make of it from a brief read is it is borrowing/ lending to other people at better rates (for both parties) than available from Banks. Mutually beneficial and seems an amazing idea but just wondering if anyone has tried it before.

http://www.ratesetter.com/

Seem too good to be true.

Brendan_O_Connell

Not this particular lender. But I have invested a few quid with a company called Zopa. They do a similar thing and the experience so far has been fantastic. Much better than having to deal with a bank.

http://uk.zopa.com/

cafcfan

Okay, this is obviously a very complex area and I noted from Ratesetters' FAQs that a new "regulated activity" of peer-to-peer lending is to be set up by the Govt. and the activity will then be regulated by the FCA (the FSA as was). The interesting thing is that both the above-mentioned firms have the required consumer credit licence provided by the OFT. (These licences are incredibly easy to obtain). However neither say what their FCA status is. I suspect they don't have one and are therefore not regulated by the FCA at all. (Even the Charlton Athletic Supporters Trust is regulated by the FCA for heaven's sake!)

That's quite interesting because they are acting as a middleman in the provision of loans. If they start spreading the risk by pooling lenders' money rather than directly matching of lenders to borrowers, then they could be in trouble.

The FCA (in its previous FSA incarnation) got quite strict about the land bank businesses which effectively involved the pooling of client assets, concluding I suspect that the land banks were merely "collective investment schemes" as defined by the legislation and therefore illegal if not regulated.

This is what the FCA's website has to say about peer-to-peer lending:

"Currently, borrowers through such platforms have only limited protections in law. However, the peer-to-peer platforms are likely to require a consumer credit licence from the OFT (covering the licence category of 'debt administration'). Lenders are currently afforded even less protection in law than borrowers.

The Treasury has announced that the FCA will be regulating peer-to-peer lending."

It seems to me that unless these schemes have been very, very carefully set up and managed that it would be quite easy for them to fall foul of the FCA's regulatory regime and thus to be illegal. If you think about it, unless there is specific matching of a loan to a borrower, they are actually acting pretty much like a bank.

Borrowing from them is one thing - what have you got to lose? But personally, in the light of the FCA's comment, I wouldn't be handing over my hard-earned to them to on-lend until such time as they are properly regulated and their activities are protected first by the Financial Ombudsman Service and second by the Financial Services Compensation Scheme in the event that they go belly up.
Okay they say there are safeguards in place but what if things get tight and the "safeguard money" is not placed in trust or the accountancy goes awry? What if there was a whiff of then getting into difficulty, the borrowers would stop re-paying and the whole scheme came tumbling down? I know I'm being cynical but I've seen too many well-intentioned schemes go pear-shaped to take anything at face value.

Off_it

I think cafcfan is right.

Probably less risk if you're borrowing, but nothing in the small print convinced me that it was even a reasonably safe bet to invest in (if I had any cash to invest, of course!)

RodneyCharltonTrotta

Thanks chaps and thanks for taking the time to write that cafcfan.

Unfortunately it's borrowing not investing im after ha ha.

The men behind it all seem credible with their background profiles and not exactly Ron and Reggie but did concern me the lack of FCA regulation.

Was talking to a mate about them and he said the risk is mainly with the lender but apparently the lender can at anytime recall the debt which is prevented when you take a fixed loan via the normal channels which obviously is potentially problematic for longer term borrowing.

Thanks, will look further into it.

Off_it

Just take the loan out in nollys name RCT - sorted!

RodneyCharltonTrotta

Tried that mate he's blacklisted.

seth plum

I put £150 into zopa to test the water. I hope to get about 5% interest at the end of the year. If that happens I might put in more because mainstream interest rates are mainly below inflation.

bolloxbolder

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