Provision Fund

Designed to help protect lenders from borrower late payment or default on an ongoing basis.

Reducing the risk of peer-to-peer lending

How the Provision Fund works
The money in the Provision Fund comes from charges paid by borrowers. RateSetter is able to direct the Provision Fund trustee to compensate a lender in the event of a borrower late payment or default. Though we believe the Provision Fund provides meaningful protection for investors, it is important to remember it is not a guarantee nor an insurance product, and your capital is at risk. Read our Product Disclosure Statement for more information.

Estimated Provision Fund coverage

A key determinant of whether a claim is made on the Provision Fund to compensate lenders in the event of a borrower late payment of default is whether there is more money in the Provision Fund than there are expected defaults on outstanding RateSetter Lending Platform loans.


Money in Provision Fund^


Expected Provision Fund inflows^^


Provision Fund buffer^^^


Value of loans outstanding**


Current estimate of bad debt***


Provision Fund coverage ratio

^ Funds currently held as cash within the Provision Fund.

^^ Expected Provision Fund inflows represent contracted borrower contributions to the Provision Fund due over the lifetime of loans, adjusted to reflect expected early repayments, payment holidays and bad debt.

^^^ Provision Fund buffer is the sum of money in the Provision Fund and expected Future Provision Fund inflows.

** Value of loans currently outstanding for which RateSetter may make a claim on the Provision Fund.

*** Current estimate of bad debt is based on our analysis of borrower credit characteristics and the value of loans outstanding. Our estimate of bad debt may change at any time.

A Provision Fund coverage ratio greater than 100% indicates that investors should receive all amounts of interest and principal due as the Provision Fund Buffer is greater than expected bad debts. However, the Provision Fund is not a guarantee nor an insurance product.

A proud track record

RateSetter in the United Kingdom was the first peer-to-peer lender globally to introduce the concept of a provision fund to compensate lenders in the event of a borrower late payment or default.

We're proud that in Australia our Provision Fund has ensured that every single one of our investors has received every amount of principal and interest due to them. Our number one objective is to maintain this track record on an ongoing basis.

Frequently Asked Questions

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