RateSetter reveals details of investor appropriateness test
RATESETTER is set to introduce a seven-question appropriateness test “very shortly”, ahead of the rule changes that come into effect next month.
At The Investing and Saving Alliance (Tisa) P2P Forum on Monday, Adam Tarpey, product manager at RateSetter, said that the firm is “almost there” with its appropriateness test.
He revealed that it will contain seven single-answer questions and investors must get them all correct to continue.
Investors will be given up to two attempts per question and the option for more background information to help them understand the questionnaire.
There is no limit to how many times investors can take the test, but the answers to the questions will be in a different order.
Tarpey said that it is “not just a test of intellect”, but about making sure investors understand what they’re signing up for.
Read more: Four key takeaways from RateSetter’s full-year results
He also said that the appropriateness test will not be on the first page of the investor registration journey, although it will be part of the process.
The firm has been implementing internal and external user testing and will release the changes ahead of 9 December.
Less than 13 per cent of investors have skipped or failed to complete the self-certification tests so far, Tarpey said. The appropriateness test is expected to have a higher drop-off rate as it is longer.
As Peer2Peer Finance News previously reported, RateSetter began rolling out its self-certification questionnaire earlier this month. It has emailed its investors, asking to confirm which of four investor types they fall into: self-certified sophisticated investor; certified sophisticated investor; restricted investor (i.e. never invested in P2P before, or have invested just once); and high-net-worth investor (i.e. income of £100,000+ or net assets of £250,000+).
The Financial Conduct Authority announced in June that platforms must introduce appropriateness tests and self-certification for investors, as part of a wider array of rule changes for the sector.
Under the regulations, platforms will be restricted to marketing to those who are certified or self-certify as sophisticated investors, those who are certified as high-net-worth investors, people receiving regulated investment advice, or those who certify that they will not invest more than 10 per cent of their net investible portfolio in P2P agreements.
Platforms must carry out an appropriateness assessment which considers a client’s knowledge and experience of the P2P investment before the platform can accept a subsequent instruction to invest. It is up to platforms to decide how this test will look, but the regulator has provided guidance on the information that can be provided and what needs to be assessed.
