Rolling market changes on 5 September

With reference to the last sentence, can someone correct me if I am reading this wrong.

Capital paid back each month by the borrower (who your original loan contract was with) cannot be moved to holding or withdrawn.

To get this money back, you need to reinvest with a new borrower on the market, then do a RYI and serve a 14 day ban, else your money is reinvested forever or until it falls below £10, when it's then put into holding?

Yep, that's how I read it too.

Only because that's how it's been recently re-defined. The original definition was that the loan was matched month-to-month on a rolling basis to different investors allowing investors to come and go on a rolling basis.

I'd suggest you reconsider this. It is highly illogical, and ultimately likely to lead to higher costs for RateSetter.

Until or unless RateSetter starts to pay interest on the order, there is no justification for imposing a penalty for cancelling it.

If cancelling an order and re-investing the money at a higher rate has a cost to RateSetter, cancelling the order and being unable to re-invest it so that RateSetter has to source the funds from even higher market orders has an even higher cost to RateSetter.

Based on what I read on forum posts, you've already seen this in recent days, when there were undoubtedly investors who would quite happily have piled in at rates around 4% to 5% but were physically unable to due to serving a 14 day ban, so instead you had to match money at up to 6%.


At least properly think through the implications of the scenario you're describing - the following shows how RateSetter's current policy will cost RateSetter more money:

Alice is willing to lend at whatever the market rate is, but has limited turnover of funds.
Bob is willing to lend considerable amounts of money, but only at rates of at least (say) 4.5%.

Alice's money gets re-matched pretty much as fast as it gets repaid, as she'll take the day's "market rate".
Bob's money tends to accumulate in an unmatched order, as the market rarely reaches 4.5%.

From time to time, Bob figures that the money isn't going to get matched any time soon, and withdraws it to invest elsewhere.

10 days after Bob last did a withdrawal, there is an unexpected surge in demand on the market. Bob would like to add a large pile of extra money in order to match the 4.5% to 5.0% rates he sees available, but finds he is unable to.

Alice's money has already been matched, and with Bob unable to add funds to the market, rates surge even higher.

Carol notices the surge in rates, and because she hadn't done a withdrawal in the last 14 days, she is able to demand rates in the region of of 5.5% to 6.0% and get matched because Bob's money wasn't there to prevent the rates from rising any higher.


Also, the policy of treating a cancellation of an unmatched order the same as a withdrawal will make investors MORE likely to actively withdraw from the market...

Suppose Bob has a legacy portfolio of older loans at rates around 3.5%-4.0%. Whilst the opportunity to occasionally get matched at 4.5% remains, he'll avoid withdrawing those in order to avoid the 14 day ban, as his 4.5% money is good to be matched at any moment there's a spike in rates.
If the cancellation of an unmatched order is treated as a withdrawal, then the moment Bob wants to withdraw his unmatched funds, he might as well withdraw the whole lot, wait out the 14 day ban and then wait for the next spike in rates and re-invest with Carol.



In summary:
- penalty for withdrawing from MATCHED loans: fine - this acts as a deterrent for an activity that has the potential to directly cost RateSetter money.
- penalty for withdrawing from UNMATCHED orders: illogical, and likely to lead to activities that cost RateSetter even more money.

That announcement again feels like a reprimand.

I was honestly hoping that I was going to be able to come back in a significant way in a few days but this is so far from the monthly market that I originally signed up for that I just don't think I'm going to be able to bring myself to do that.

And I can't even be bothered to argue the point with you any more RS. I just think it's a great shame that you are choosing to continue to treat your investors in this way.

Clearly it won't be long before the 'rolling' is a set figure, 3.5%? 4%?

What about withdrawn funds not being allowed to be re-matched at a higher rate to stop 'gaming the system'?

So the 5th September about face now comes with more traps for investors.  Should have seen that coming!

Seeing as sensible investors share their investments across lots of different products and platforms by preventing lenders from using RYI to then invest in higher rate loans makes lenders far more likely to just take the lower rate earning money out of RS rather than put up with these pathetic and petulant bans on reinvestment that only hurt RS.

I thought your initial decision to remove the ability to set rates was powerful stupid.  This latest announcement is more of the same, surely you must be running out of feet to shoot by now..  Perhaps you could actually admit to making a massive mistake, apologise, and go back to something called a Monthly Market?  Or just give up and offer a new account alongside the existing ones which is just a black box savings account offering 4.1% like Assetz Capital does?

... and as long as your current-year IFISA isn't somewhere else.