New Ratesetter rules for re-investment (market rates only)

I do wonder why they didn't replace the account with one that simply paid a fixed rate of 3 percent and did away with all the complications.

They must have had some great workshops coming up with the revisions and marketing material.

at what point will they change the name of the business ? somewhere along the line the origin and meaning of "RateSetter" has morphed from YOU set the rate you were prepared to lend at to WE'LL set the rate you will lend at....

That sounds like it should work in theory.

Unfortunately it won't really work for me.  I run an account for my Mum where (on her behalf) I reinvest capital only.  Interest is accumulated in the holding account and paid out automatically once a month.  If I were to switch to sending everything to the holding account it would be incredibly hard work separating out and reinvesting the capital every day.

From today she and I will no longer be using the rolling market.

My initial reaction is very negative - am contemplating shifting out my IFISA funds from this year. However, this may require some thought.

As I understand it, the potential upside is that if you are lucky enough to snag a good rate, you can keep it for as long as the underlying loans run.

So, might it work if you set up a wedge with whatever you consider to be a decent rate and then just sit and wait for it to catch ... and, as long as you're not too greedy, then sit on the benefit of having a good rate for some time without having to worry about renegotiating every month, while still having the option to cash in without penalty at any time.

Of course, this does depend on there being a peak of strong demand before your patience runs out!

Just need to make sure that any present funds are "free" before the new system cuts in on June 6.

Of course, when the loan does eventually end you'll have to face 14 days of cash drag before repeating, unless there is a better offer elsewhere at the time. Within an IFISA that could be quite a pain: outside, not so bad, especially if you have Mr and Mrs accounts to play with.

Next Ratesetter will be changing its name to Rateset.

Too much tweaking going on.

I am not happy about the way this has been announced. Is this the new standard for ratesetter? This is a fundamental change and the details should have been sent by email to all members. 

As others have stated, this change clearly undermines the whole principle of The Ratesetter business - that the investor can set their own rate - even if they want the money to sit forever waiting to be invested. 

It would appear Ratesetter want to force the rate down for whatever reasons - the statistics they supply about the status of the markets have shown significant downtrend in rates over the last year or so - ever since they had to take a massive hit for those failing car money lending businesses they were dealing with.

I am not clear why Ratesetter is doing this - they claim that the current model is costing them.

In the past year or so we have seen the elimination of the medium term investment market (3 year) and now major changes to the short term (rolling) market. It would appear that Ratesetter, like,Zopa and others are heading towards the idea of long term (5 year) investment for low yield (slightly above bank rates) and want to become “new generation banks”. Well no thanks. You are not banks - the risks of collapse are far to great and the marginal rate you offer is far too low for long term risk commitment. If I wanted this model I would invest in traditional stocks and shares. 

Personally, I will no longer use the rolling market, and I will begin withdrawing funds - I have my personal reasons for doing this. I had enjoyed my foray into P2P but all indications are that it’s days are numbered. 

(I might be going “over the top” with this assessment, but we all have our own levels of risk we are prepared to accept and I cannot afford to lose too much).

With this news I'm voting with my feet.  I've set all reinvestment to go to the Holding Account from whence it will be withdrawn and moved to something more profitable.  This time next month my Rolling Account balance will be zero so they do with it what they want but they will do it without me.