Rateetter to shut all investor accounts and switch borrower loans to Metro Financial institution
Peer-to-peer lending firms like Ratesetter act as a financial matchmaker, which means investors can use cash to lend to individuals and businesses. Investors can get higher returns than savings accounts, but they must take a risk with their money. We have always warned that peer-to-peer investing does not come with guarantees of security, as is the case with savings. For more information, see our Peer-to-Peer Loan Guide.
Crucially, the peer-to-peer model is also a new sector with many lenders that didn't exist in the 2008 recession. Therefore, the entire sector has not yet been tested by a financial crisis. The impact of the coronavirus pandemic has already resulted in Ratetter reducing investor interest. Today's news comes a few months after some of his clients complained about long delays in withdrawing their investments and some waited seven months for their money.
The Zinssetter investor accounts will close on April 2nd – but borrowers will not be affected
Metro Bank is buying the entire loan portfolio from Ratesetter, but while keeping the loans itself, investors' accounts will automatically close on April 2nd. Read on to learn more about what this means for investors.
If you are a guess setter borrower, nothing changes. This means that you will continue to have to pay back your loan at the same interest rate and terms as you do now.
If you are a guess setter borrower, nothing will change the way your loan works. It will continue to be managed by Ratesetter under its own brand even once it is owned by Metro Bank. This means that you will continue to have to pay back your loan at the same interest rate and terms as you do now.
All funds in investment accounts and ISAs will be returned by April 7th
Investors don't have to do anything at the moment – your investment account will automatically close on April 2nd and your money will be returned to a holding account at Ratesetter. In this case you will receive a notification.
The company expects all funds to be returned to customers by April 7th. You will then need to log into your Ratesetter account in order to withdraw the funds from the inventory account and deposit them into your bank account. Alternatively, if you have an ISA with a rate setter, you can transfer it to a new provider. Please see below for more information.
Ratesetter has not set a deadline for withdrawing your cash. We were merely told that investors would be given "enough time" to prepare.
You will continue to earn interest until the accounts are closed
Investors will continue to receive interest at their existing rates until their accounts are closed on April 2nd. But like now, you are not earning interest on money in the inventory account.
In May 2020, Ratesetter halved the interest rates on its investor accounts, but these were normalized again on January 28, 2021. The interest rates vary depending on your guessetter account.
If you withdraw funds before April 2nd, you may be charged a fee
It's worth noting that before April 2nd, you can apply for a withdrawal on your investment. However, this is subject to the standard early posting fees on your account. Early release fees differ depending on the type of investor product you have purchased – Access, Plus, or Max. The Access account has no fees to access your cash, while Plus and Max offer higher returns, but with interest penalties for early access.
How soon you will get your money back also depends on the availability of the funds that Ratesetter has at the time. However, it is emphasized that the backlog of requests has now been resolved and that new withdrawal requests will be processed within 24 hours.
You will need to transfer ISA cash to a new account in order to maintain tax-exempt status
If you have an ISA with a Ratesetter and you want to keep your funds tax-free status, you will need to transfer the funds in your ISA account to a new ISA provider using the new provider's transfer method. You can find our current Best Buys in our ISAs guides for stocks and shares and Top Cash ISAs.
Again, Ratesetter has not confirmed a deadline for the withdrawal of your cash. We were merely told that investors would be given "sufficient time" to make arrangements.