Ratesetter: Transparency is the cornerstone of P2P lending

Peer to Peer lender Ratesetter has burst onto the Australia lending scene, winning a Canstar 5 star rating for Outstanding. 

Each year Canstar researches and rates personal loans available on the Australian marketplace. This year we have analysed 290 personal loan products from 78 lenders, and for the first time a peer to peer (P2P) lender, Ratesetter, has won a five star rating for outstanding value. We caught up with Ratesetter Australia CEO, Daniel Foggo, for an update on Ratesetter’s first twelve months of operation in Australia.

Q: Ratesetter has just passed its first birthday in Australia. What are the biggest milestones that you have reached over the 12 month period?

A: It’s been an exciting first 12 months for RateSetter, with many important milestones achieved.

Most importantly for Australian consumers, RateSetter personal loans have consistently beaten the rates offered by traditional lenders. With comparison rates from 8.9% p.a. for an unsecured 3-year, $10,000 loan, borrowers are saving thousands in interest compared to a personal loan from traditional lenders.

Lenders have also enjoyed great results. We have facilitated more than $14 million in loans and returned more than $200,000 in interest to investors. All without a single loan default to date.

In our first 12 months, RateSetter has also worked hard to introduce a number of significant innovations to the Australian personal lending market, including:

  • The first Australian lender to utilize a ‘soft credit search’, to provide consumers with a personalised estimate of their rate without impacting their credit score
  • The first P2P lender to introduce secured loans, giving consumers even more choice and better rates
  • The first Australian lender to fully implement Comprehensive Credit Reporting (CCR) data sharing, and
  • The first P2P lender in Australia to introduce the concept of a provision fund to help protect investors from borrower late payments or default, helping to make P2P lending simpler and safer. The RateSetter Australia provision fund currently holds close to $750,000.

RateSetter has also formed important partnerships with Carsales.com.au and stratton finance.

 

Compare Personal Loan Interest Rates

 

Q: Any setbacks that you weren’t expecting?

A: The adoption of CCR has been much slower than we had hoped.

We know from our international experience that CCR has proven successful in other countries around the world, and has helped to deliver significant benefits to both lenders and borrowers. Australian consumers deserve to be rewarded for good credit behaviour through easier access to credit and better rates.

 

Q: It’s an interesting (and impressive) strategy for you to open your loan book to public view. What considerations went into that decision?

A: We are proud to be the first P2P lender to release our loan book data in Australia. Sharing this data is commonplace in the US and UK where P2P lending is more established, but this level of transparency is unheard of in Australia and we want to encourage it. This sets us apart from traditional lenders and demonstrates our commitment to developing real trust with our borrowers and lenders.

We believe that real transparency is the cornerstone of P2P lending and that taking a ‘nothing to hide’ approach to our data will help encourage greater consumer confidence in P2P and the RateSetter platform.

Releasing this data helps ensure that as operators we are held accountable for the quality of the loans the platform facilitates. We are encouraging others in our industry to follow us and open up their loan books to help create a new standard of openness and transparency.

 

Q:  P2P in Australia is still in its infancy. What changes in the P2P market do you expect to see over the next 12 months?

A: We expect to see continued strong growth in P2P in Australia with a number of new products and players entering the market over the next 12 months, and we welcome that.

We want to see lenders and borrowers provided with greater choice and to take more control of their personal finances. P2P lenders are changing the personal finance landscape and the greater the awareness of the benefits of P2P, the greater the outcomes will be for Australian consumers.

 

Download the 2015 Personal Loans Star Ratings report

 

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