Metro Bank's acquisition of RateSetter has completed

We are writing to give you notice that from 14 October the 5 Year market will close. From that date, investors will no longer be able to make new investments or reinvestments into the 5 Year market. Existing investments in the 5 Year market will continue to return capital and interest as loans repay in accordance with their schedule.

At the same time, we are announcing that we are restoring access to the 1 Year market to all investors in the 5 Year market. You can make new investments into the 1 Year market or set your 5 Year market repayments to reinvest into the 1 Year market, both in your Everyday account and your ISA account.

The 1 Year market offers a similar Market Rate to the 5 Year market, with a shorter loan term. It has the same Provision Fund protection as all other RateSetter investments.

Investors will be able to reinvest into the Access, Plus, Max and 1 Year products as well as direct repayments to their Holding Account. Please log in and update your reinvestment settings.

Below are the features of our products:
Product Going Rate* Investment release fee Term
Access 3.0% Zero Continuous reinvestment
Plus 3.5% 30 days’ interest Continuous reinvestment
Max 4.0% 90 days’ interest Continuous reinvestment
1 Year Market Rate 4.8% 0.3% 1 Year

*Investor interest rates are reduced by 50% during the temporary Interest Reduction period. Market Rate shown for the 1 Year market is the average annualised rate for August.

Please note that since March the ability for early access has been reduced and we expect this to continue for some time. Early access is dependent on supply and demand in each market, and since March demand has outstripped supply. Given this, we ask that anyone investing new funds or reinvesting from the 5 Year market should only do so if they do not need early access to their funds for the time being.

The 5 Year market’s Release Your Investment functionality will also close on 14 October. From that date, investors will receive payments of capital and interest in line with loan schedules.

All new lending from Access, Plus and Max and the 1 Year product will be to the following RateSetter loan types: secured residential property development finance, asset finance, family finance and giffgaff loans. Investors may be matched to other types of existing loan in the portfolio.

The Provision Fund will continue to apply to all investments as normal, and RateSetter will continue to service the loan portfolio.

Why is RateSetter making this change?

All new unsecured personal loan originations will be funded by Metro Bank in line with their stated strategy to grow in unsecured lending. RateSetter’s other lending commitments, the majority of which is secured residential property development which is not a business area of focus for Metro Bank, will continue to be funded by RateSetter investors.

The 1 Year market is designed to fund property development loans, unlike the 5 Year market (because property loans repay capital and interest at the end of the loan term rather than in monthly instalments). We are therefore restoring access to the 1 Year market to investors in the 5 Year market to improve the supply of funds by allowing more investors to put their money to work in the 1 Year market.

You may update your reinvestment settings from today. Please note that unless you update your 5 Year market reinvestment settings your repayments will go into your Holding Account and will not continue to be invested so if you do want to continue to reinvest please log in to update your reinvestment settings.

Q&A

How much notice do you need to give to close the 5 Year market?

We are giving 30 days’ notice as per 14.3 of the Investor Terms.

I have an investment release request pending. What happens to it?

Investment release requests in the 5 Year market will continue to be processed chronologically until 14 October. Following that date, the investment release functionality will close in the 5 Year market as communicated under 14.3 of the Investor Terms. At that point, all 5 Year investment releases requests will be cancelled and investors will receive payments of capital and interest in line with loan schedules. There is no change to investment release requests in Access, Plus and Max and the 1 Year market.

What happens to money on market that has not been matched?

Money on market and unmatched at 14 October will be returned to your Holding Account.

I have an auto invest instruction in the 5 Year market. What happens to it?
It will be cancelled as of 14 October.

How do I transfer out my ISA out of the 5 Year market?

As ISA transfers out must be in cash, the balance will need to be paid into your Holding Account before it can be transferred out. It is important that an ISA is transferred and not withdrawn to avoid losing the tax-free status. In order to initiate a ISA Transfer Out, you need to contact the ISA Provider where you wish to transfer the ISA to.

Is giffgaff lending unsecured consumer finance? Will Metro Bank fund this when the acquisition is complete?

giffgaff is unsecured point of sale finance, and this type of lending will not be funded by Metro Bank.

Why not allow 1 Year market investors to access the 5 Year market too?

The 5 Year market does not fund property development loans, whereas the 1 Year market is designed for exactly that purpose.

Why not allow Access, Plus and Max investors to access the 1 Year market?

Access, Plus and Max have a different set of investor terms to the 1 Year and 5 Year markets. The 1 Year and 5 Year markets share the same investor terms.

Will I be able to access my funds early in the 1 Year market?

Since March, the ability for early access has been reduced and we expect this to continue for some time. Early access is dependent on supply and demand in each market, and since March demand has outstripped supply. At some point this is expected to reverse with supply outstripping demand which will return liquidity to all products. Given this, we ask that anyone investing new funds or reinvesting into the 1 Year market should do so on the basis that their funds will remain invested for the full 1 year term.

How much property lending are you doing?

You can see the composition of the loan portfolio here. We are continuing to deliver to our existing property finance customers ensuring the developments are completed and then sold, which is in the interests of both borrowers and investors.

What are the lending criteria for property loans?

You can see our lending criteria here.