RateSetter

RateSetter is a British personal loan provider, founded in 2009 as one of the pioneers of peer-to-peer lending. The London-based company traded in the United Kingdom and (from 2014) through a locally-owned and run business in Australia. The UK business was acquired by Metro Bank in September 2020, leading to closure of the peer-to-peer products in April 2021.

The company’s focus was the retail investor and it is known for having introduced a number of innovations to peer-to-peer lending, such as a provision fund which mutualised risk, in order to make the product simpler and more accessible.

Its focus was on narrowing the spread between what investors could safely earn and what creditworthy borrowers could pay: in this way it was providing an alternative model to the traditional banking model of deposits and loans. Multiple billions were lent via the platform between over 750,000 investors and consumer and business borrowers, and investors always received a positive return above the rate they could achieve on savings rates.

History
RateSetter's holding company, Retail Money Market Ltd, was incorporated in October 2009 by Rhydian Lewis, an investment banker from Lazard, and he was joined by co-founder Peter Behrens, a lawyer turned banker formerly of Royal Bank of Scotland. The private limited company was funded initially by angel shareholders.

In July 2014, it was announced that the British Business Bank would begin lending through RateSetter to support borrowing for business purposes.. RateSetter also had other institutional lenders, although its focus was always on retail investors.

RateSetter was active in the lobbying of government to introduce a regulatory framework to peer-to-peer lending and this came to fruition in late 2014 with the announcement that the industry would be regulated. This materialised in 2017 with the first set of regulations which were to be reviewed after a couple of years in order to ensure they were appropriate, which indeed happened with the second round of regulation in late 2019. This second round anticipated investing via these platforms to become a mainstream investment. The regulatory framework enabled the launch of the Innovative Finance ISA which took place in 2018. Peer-to-peer lending was in effect one of the first new regulated financial products for some time.

RateSetter ended 2014 as the largest P2P lender in the UK by volume (the other major players being Funding Circle, Zopa and LendInvest). In spring 2015, RateSetter attracted investment from UK fund managers and a global family office. Later that year, RateSetter moved to offices in the City of London on Bishopsgate, London.

In 2017 City heavyweight Paul Manduca became chairman of RateSetter; he was at the time also chairman of FTSE-100 Prudential plc. RateSetter also raised further equity investment from shareholders, valuing the business at over £200m.

With its continued focus on the retail investor, RateSetter became the largest provider of the Innovative Finance ISA. The business was growing and preparing for a potential IPO in the UK. RateSetter's investors were earning a premium to bank savings rates, while its loans were some of the most competitive on the market.

RateSetter was planning a pre-IPO equity raise in the first half of 2020. The company had been valued over £200m in its most recent funding round. The company was positive on the regulatory framework that had been put in place in the UK with effect from December 2019, which it believed would be the foundation for the industry maturing after its first decade. This equity raise was disrupted by the immediate aftermath of the first lockdown in March 2020 which caused widespread financial panic.

In May 2020, as a contingency for the widespread expectation of increased risk across UK lending COVID-19 pandemic, RateSetter halved the interest rate paid to lenders. Liquidity was also temporarily delayed but had returned by October. Full payment of interest resumed on 28 January 2021.

Acquisition by Metro Bank
In May 2020, it was announced that RateSetter had been approached by Metro Bank, a British challenger bank. Agreement was reached in August, for an initial payment of £2.5m and a total price of £12m conditional on meeting certain performance criteria. The purchase was subject to regulatory and shareholder approval, and completed on 14 September 2020. The Australian unit was not part of the sale and continued to be owned by its shareholders.

Metro Bank said it intended to continue the RateSetter brand and operations, with new lending funded by the bank's deposits, not through peer-to-peer. The bank went on to use the platform and brand for some of its savings products.

In February 2021, Metro Bank bought out the P2P investors at par, valued at £384m. Some among the 45,000 then investors objected to the inclusion in the transaction of the "provision fund", which had been bolstered by interest diverted from investors in recent months. Metro Bank's focus was on consumer lending and therefore RateSetter's property lending business was sold in 2021 to Shawbrook Bank.

Towards the end of 2023, Metro Bank ceased using the RateSetter brand for savings accounts and new personal loans.

RateSetter Australia
RateSetter Australia commenced operations in November 2014. The Australian business, based in Sydney, is managed and majority-owned locally, and was the first peer-to-peer lending platform in the country open to retail customers.

In December 2017, it was announced that over AU$200m had been lent via the platform. By mid-2020, lending had grown to AU$800m and the company was preparing for a stock exchange flotation.

In 2019, 14% of the company was owned by Retail Money Market Ltd; this holding was not included in the 2020 acquisition of the UK business by Metro Bank.

In August 2020, RateSetter Australia was renamed Plenti ahead of an IPO which took place in September 2020.