The site is like a money market. Lenders offer funds and can set their desired rate, borrowers can request funds and ask for their desired rate. This forms a money queue and the price fluctuates on supply and demand.
Originally posted by MyOnlyPost

That's how Ratesetter like to portray it, but it's sadly not true. Borrowers get the rate they're given, and don't play any part in the market.

In reality, the borrower side of the market is just Ratesetter themselves. They're free to set rates wherever they want, and so can (and I believe do) manipulate the market however they want. The lower they drag rates, the higher their profit margin.

For example, the Market Rate is based on matches made the previous day, but there's a cut-off time. So almost every day RS hold back, keep the rates low, and then gobble up lenders' funds overnight, making matches at higher rates that don't count towards the next day's MR.

Add the misleading advertising of sell out rates, the drop in Provision Fund coverage to below their own targets, the counting of future income not yet received as part of the PF, the lack of independent oversight of the PF (something they promised ages ago) and the fact that RS can dip into the PF for almost any reason they want (7.2 in the t&cs), and you can see why I got the hell out of there.

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