How can we help?
Who am I lending to?
We facilitate lending to creditworthy Australian-resident individuals and creditworthy Australian-resident businesses, although the majority of our lending is to individuals rather than to businesses. Our average borrower earns an income of $84,000 and is 40 years old. Borrowers are typically seeking loans for purposes such as consolidating debts, purchasing a car or renovating their home. In our National Clean Energy lending market, borrowers are seeking funds for the purchase and installation of clean energy equipment, such as solar panels and batteries.
At RateSetter, we do the work for you. We carefully examine an applicant’s credit file and circumstances to understand their financial position and ability to repay the loan. Our standards mean that we are not able to assist a large majority of borrowers that submit an enquiry.
RateSetter provides a confidential lending service. The only details you are provided about a loan to whom your funds are matched to is a reference number. All identity, credit, affordability and suitability checking is performed by RateSetter, and is not displayed on our website. However, RateSetter publishes a full loan book that sets out details (including loan amounts, interest rates and purposes) on every loan funded to help you understand more about the profile and performance of our loans.
For more information, you shouldsee the Product Disclosure Statement.
What is the Provision Fund? How does it work?
The Provision Fund is designed to help provide investors with ongoing protection against borrower late payments or loan defaults. It is not a guarantee or an insurance product.
RateSetter in the United Kingdom was the world’s first peer-to-peer platform to introduce a Provision Fund to help protect lenders from financial loss in the event of a late borrower payment or default. This innovation represented a significant evolution in peer-to-peer lending, helping to make it simpler and safer for investors.
The money in the Provision Fund comes from charges paid by borrowers. When a borrower applies for a loan, they may be required to pay a charge (the Risk Assurance Rate or Risk Assurance Charge), the amount of which is determined by a number of factors, such as their credit rating from independent credit bureaus. Borrowers pay the the Risk Assurance Rate or Risk Assurance Charge into the Provision Fund.
Although the Provision Fund is funded by borrowers, it has been established for the benefit of lenders. RateSetter may, at its discretion, instruct the Provision Fund’s trustee to pay an amount out of the Provision Fund to compensate lenders for a loss arising from a borrower default. Importantly, funds held in the Provision Fund are held for the benefit of investors. RateSetter cannot use these funds for its own purposes. The Provision Fund can only be used to compensate investors for losses of principal and/or interest.
For further information about the Provision Fund, see the Product Disclosure Statement.
What are the fees when investing?
Investors are charged an interest margin fee of an amount equivalent to 10% of the gross interest they receive from borrowers. This is charged whenever an interest payment is received. Investors do not earn interest on funds in their holding account, as interest earned on the bank account that holds RateSetter investors’ funds is retained by RateSetter. Management costs also include borrower fees. Read our Product Disclosure Statement for further details.
Importantly, all lending rates displayed on the RateSetter site take into account the fees you are required to pay. The rate you see is the rate you get, subject to a few important assumptions. Learn more about how we calculate and display rates.
Is RateSetter a bank?
RateSetter is not a bank, and RateSetter investor accounts are not bank accounts. RateSetter is not authorised under the Banking Act 1966 (Cth), nor is it supervised by the Australia Prudential Regulation Authority.
RateSetter is regulated and licensed by ASIC, holding both an Australian Financial Services licence (number 449176) and an Australian Credit Licence (number 449176).
How is risk managed?
RateSetter has put in place a number of measures designed to minimise the risk of investors losing money due to borrowers making a late payment or defaulting on their loan.
Firstly, we are very cautious about who can borrow using RateSetter. Before any borrower is approved for a loan, our underwriting team verifies their identity, checks their credit, and assesses their risk. RateSetter only lends to creditworthy individuals with Australian residency. You can view statistics about our credit performance by registering as an investor (this is free and there no obligation to lend) and clicking the “RateSetter data” tab.
Secondly, the Provision Fund exists to help protect lenders from loss. The Provision Fund is not a guarantee nor an insurance product. However, thanks to the Provision Fund no RateSetter investor has lost a cent of principal or interest. Learn more about the Provision Fund.
Thirdly, we employ an experienced, specialist debt collection agency to help us retrieve late payments or defaulted loans. Until an investor’s funds are lent out, they are held in trust by an independent custodian in a bank account at an Australian Authorised Deposit-taking Institution.
Finally, to satisfy obligations under our Australian financial services licence (AFSL) and Australian credit licence (ACL), we undergo a number of external audits every year. This ensures that investor funds are properly accounted for and our platform is operating as it should.
Read our Product Disclosure Statement to learn more about the risks of investing
How do I start investing?
You can register to invest online in just 5 minutes. Once you have registered, you will can transfer funds into your RateSetter account.
Once we have approved your registration, you will be able to select the lending market you wish to invest in, set your rate and have your funds matched with loans to creditworthy borrowers.
For more information about investing, you should see the Product Disclosure Statement.
How are loans repaid?
Loans are ordinarily repaid via direct debit, with the repayment dates defined in accordance with the borrower’s loan schedule. You can view any payments that you are scheduled to receive using your RateSetter account. Simply log in, click the relevant lending order under “Your loans and orders” in the left-hand menu, expand the box titled “On loan”, and then click the “Your funds on loan” link.
Your schedule of payments is defined by the terms of the lending market you have decided to lend in.
Funds may appear back in your holding account earlier than anticipated. In some circumstances, you may not receive your funds until after the indicated term.
For further details, please see our Product Disclosure Statement.
Does the Provision Fund guarantee I will not suffer a loss?
No. We believe the Provision Fund provides meaningful protection for investors, and to date, no investor has lost any principal or interest due. However, it’s important to remember that the Provision Fund is neither a guarantee nor an insurance product and your capital is at risk. Hence, in the event of a borrower late payment or default, an investor may not be fully or partially compensated.
If you are not compensated by the Provision Fund in the event of a borrower late payment or default, you may instead benefit from a number of debt collection or recovery processes undertaken by RateSetter, which may or may not recover any funds.
Please read our Product Disclosure Statement for more information.
Are my returns taxable?
Yes, the net income earned on your Portfolio will be assessable for tax.
If you do not provide your Tax File Number, we are required to withhold tax from your net interest earnings at the highest marginal tax rate. This rate is currently 45%. This amount is remitted to the ATO. If you provide your TFN, we will not withhold any tax.
To make it easy for you to complete your tax return, we will provide an annual statement that outlines the interest you have earned and the net of our fees.
Please refer to our Product Disclosure Statement for further information regarding tax on your RateSetter investment. The tax implications outlined in our Product Disclosure Statement are general in nature and do not take into account your specific circumstances. You should obtain specific taxation advice from a suitably qualified taxation advisor before investing.
Are loans secured or unsecured?
Loans to borrowers may be secured or unsecured. You do not choose whether your funds are matched to secured or unsecured loans.