Ratesetter has so far cushioned its investors from losses like the £80m below, however the provision fund is around £17.3m at present. To put this into context, the total money lent out by Ratesetter is £543m. It would take just 3.2% of loans to default to wipe out the fund (defaults last year were 0.73%, down from 2.21% the previous year).

With this in mind, should safeguards be put in place by the regulators in order to protect depositors? 

For a number of reasons, FSA chief Lord Adair Turner predicted that “the losses which will emerge from peer-to-peer lending over the next five to 10 years will make the worst bankers look like lending geniuses”.