Ratesetter to close all investor accounts and move borrowers’ loans to Metro Bank

But while Ratesetter is now owned by Metro Bank, its brand will still remain. From 2 April, Ratesetter will no longer operate on a peer-to-peer basis (see our P2P explanation, below) and will instead only issue standard bank loans backed by Metro Bank. Here's what the move means for investors and borrowers.

Ratesetter investor accounts will close on 2 April and you'll get penalty-free access to your money by 7 April

Here's what the move means for peer-to-peer investors, including ISA savers: 

• Ratesetter investor accounts will close on 2 April. This will happen automatically. 

• You'll have penalty-free access to your cash between 2-7 April. Your money will automatically be placed into to a holding account with Ratesetter and you'll get a notification when that happens. You will then be able to withdraw it from there or, if it's an ISA, you'll be able to request to have it transferred out by a new provider. 

  You can put in a withdrawal request sooner, but there could be an interest penalty, depending on your account. You may also need to wait a day to see the money in your Ratesetter holding account (from which you can withdraw it). 

• Your account will operate as normal (incl earning interest) till 2 April. Interest will be at your existing rate, which varies depending on the account. You won't earn interest on money in the holding account, as is the case now. 

There's no noticeable change for borrowers

Here's what Metro Bank buying Ratesetter's loans means for Ratesetter borrowers: 

• Loan rates will stay the same and loans will be managed by the Ratesetter brand (under the Metro umbrella as a standard bank loan). All other terms and conditions will also stay the same. 

What is peer-to-peer and is it safe?

Peer-to-peer lending firms, such as Ratesetter, act as financial matchmakers, meaning investors can put in cash to be lent out to individuals and businesses. Investors can sometimes get higher returns than they would with savings accounts, but they have to take a risk with their cash – we've always warned that peer-to-peer investing doesn't come with safety guarantees as savings do. See our Peer-to-Peer Lending guide for more info.

Crucially, the peer-to-peer model is also a newish sector with many lenders that weren't around in the 2008 recession, so the sector as a whole hasn't previously been tested by a financial crisis.

The impact of the coronavirus pandemic had already seen Ratesetter cut the interest investors earn – it halved the interest it paid investors in May 2020, with the other half going into a 'provision fund' intended to protect investors from losses. Interest rates only returned to normal on 28 January 2021. Today's news comes a few months after some of its customers complained of long delays withdrawing their investments, with some waiting seven months for their cash.