RateSetter – The long awaited ISA launch

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The long awaited ISA launch

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B U S I N E S S I N T E RV I E W

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We talk to Richard Bastin, Chief Technology Officer at peer-to-peer lender, RateSetter, about the launch of the company’s new ISA, as well as the somewhat impressive statistic that no investor has ever lost a penny!

Written by Anna McMahon • Produced by Danielle Harris

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A UK business, with the goal of providing a simple and accessible way for investors to put their money to work, RateSetter is so far proving to be a low-risk way of investing your money.

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ince it was launched over seven years ago, no individual investor has lost a penny, and the reason for this is an innovation that the company calls its ‘Provision Fund’.

Chief Technology Officer at RateSetter, Richard Bastin, explains. “At RateSetter, we efficiently match investors’ money to a diverse pool of borrowers. Each borrower pays into our Provision Fund.

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This helps manage risk, so that in the event that a borrower defaults, the Fund steps in to pay back the investor’s capital. This provides our investors with a buffer against any losses – it’s a unique proposition. So far, we have generated almost £100 million of interest to over 50,000 investors. And, we have lent more than £2.3 billion to UK consumers and businesses since we were founded seven years ago.”

RICHARD BASTIN CTO

“One of the benefits of full authorisation is that it opens the path to offering an ISA to customers, allowing them to enjoy their returns free of tax” 5

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Richard Bastin, CTO RateSetter

When peer-to-peer lending first came about, it was a completely unregulated industry. RateSetter pushed for regulation, lobbying the UK government for standards to be introduced.

Richard said, “It was a lengthy but very important process that saw RateSetter initially become regulated in 2014 on an interim basis, before moving to full regulatory authorisation from the Financial Conduct Authority (FCA) last October.”

One of the benefits of full authorisation is that it opens the path to offering an ISA to customers, allowing them to enjoy their returns free of tax. The ISA product that RateSetter provides is known as an ‘Innovative Finance’ ISA. This type of ISA was officially launched by the Treasury in 2016, specifically to allow peer-to-peer lending to be included in an ISA wrapper.

As Richard explains, “The key thing is, if you open an ISA with RateSetter, you still get all the same benefits that we

3%-6%

£2.3bn

Earn between 3% and 6% (depending on level of access required) tax-free.

RateSetter investors have lent more than £2.3bn to creditworthy UK consumers and businesses

£100m

250K+

RateSetter has generated almost £100m of interest for investors.

RateSetter has more than 250,000 active customers (investors and borrowers) 7

“RateSetter has alway investing easy for ever model is simple, openin couple of minutes and select the level of a RateSetter takes 8

ys focused on making ryday investors. Their ng an account takes a d investors need only access they require. care of the rest�

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have been offering to our customers for many years, but you are now doing it in a tax-efficient way. Our ISA customers can access the same healthy returns and also benefit from the Provision Fund buffer, but with the additional bonus of being able to invest up to £20,000 taxfree.”

When the financial crisis hit in 2008, this caused an awful lot of problems for the regulators. One of the many issues that arose included when financial firms went bust, regulators could not differentiate between the firm’s money and their clients’ money. As a result, new regulations were brought in.

Richard said, “The client asset regulations (CASS) are rules that all FCAregulated firms must follow. They are very strict, and mean that on a daily basis, firms must have fully reconciled all of their clients’ money, down to the penny, and have records that show how much customers’ money they have. In

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The year RateSetter was launched in Australia the event of any FCA-authorised firm going bankrupt, the regulators can come in and look at your systems and check that they are fully up-to-date and accurate.”

RHYDIAN LEWIS CEO 10

The system that RateSetter employs is known as AutoRek. This gives complete separation from the company’s current system, ensuring confidence that accounts are being properly reconciled every day. Thousands of records go into the system, and it matches them all up, reconciles them, and provides reports for RateSetter’s finance team. Richard adds, “CASS compliance was a key part

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Getting Started

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REGISTER YOUR ACCOUNT

open up your isa

of us achieving full FCA authorisation and AutoRek was instrumental in this process. In turn, this paved the way for us to launch the RateSetter ISA. For months, we were building the foundations to get us to where we are today.”

RateSetter has a development and testing team in its London head

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choose investme

office, as well as a team in the office of its partner, N-iX, situated in Lviv, in the Ukraine. The teams work together, acting as one, with the same processes and the same tools. Richard said, “We worked collaboratively with N-iX to build the ISA product, which involved lots of changes to our core system and website – all the functionality to support the ISA and adhere to ISA regulations. We

“Since the launch of its new ISA, RateSetter has seen a growing number of new and existing customers enjoy its tax-free benefits” 12

- 5 step process

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e your ent period

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fund your account

start earning tax-free

worked to tight timescales so that we could launch the ISA soon after securing full regulatory authorisation in October.

We were aiming to launch in good time for the end of the current tax year (5th April) to give investors plenty of time to use their £20,000 annual tax-free ISA allowance. The tight deadlines made it a challenging project, but the team worked very well together to deliver it on time. It was one of those projects that required everyone to work in an agile way, delivering features in twoweekly sprints, to a high level of quality, enabling us to launch our ISA to our existing customer base of 50,000 investors in early February, and then opening up to new investors on 1st March.”

Richard adds, “We looked at various off-the-shelf customer ticket systems that we could introduce into our customer service function to enable us to track, manage and process customer queries as efficiently as possible. We selected Zendesk, which we felt was a marketleading product. You are given the training and the tools to configure it yourself, with support available when required. It was a very rapid process to get that rolled out to our customer service team. As a result, we have been able to improve service levels, respond to customers more quickly and more accurately, and manage that process more effectively than we could have done by using the previous home-grown system.”

The company was fully aware that the launch of a new product would inevitably lead to an increase in customer queries, as well as an increase in marketing to attract new customers.

The operational intelligence received from Zendesk feeds back into RateSetter’s product development cycle.

Richard said, “The feedback is very useful because every interaction with every 13

The best customer experiences are built with Zendesk

zendesk.com 14

“By using a product like Zendesk, we are able to capture a lot of information, and we use that to make sure we are improving our product and operational capabilities” customer counts. By using a product like Zendesk, we are able to capture a lot of information, and we use that to make sure we are improving our product and operational capabilities, to ensure that we are providing what we believe is the best Innovative Finance ISA on the market.”

Since the launch of its new ISA, RateSetter has seen a growing number of new and existing customers enjoy

its tax-free benefits. The product is working well, and the customer feedback has been positive. Investors, who might not have used RateSetter before, are receiving a better return for their money than with a cash ISA, in exchange for accepting more risk. If RateSetter can continue to deliver for its customers in terms of healthy returns and risk management, we are sure that the company will become champion of the IF ISA.

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6th Floor, 55 Bishopsgate London EC2N 3AS 020 3142 6226 contactus@ratesetter.com www.ratesetter.com 16