The peer-to-peer lending platform launched in 2010 and provides investors with access to the asset class of loans by matching lenders directly to consumer and commercial borrowers.
In July, it passed the milestone of £2bn in total lending and has returned over £80m in interest to investors.
Rhydian Lewis, CEO and founder of RateSetter, said: “We are proud to receive full regulatory authorisation from the FCA.
“We have always aspired to have a regulatory framework for our business and our industry.
“We strongly support effective regulation to protect customers and enable industries to compete and grow.
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“Authorisation has been a long but positive journey during which we have learnt a lot, improved our infrastructure and implemented important changes, notably making the business more transparent.
“Transparency is vital to our business because our customers need to understand what we do to appreciate the risk of lending on RateSetter.
“Authorisation is a milestone, but not an end in itself and we look forward to working with the regulator and all stakeholders to continue to deliver good customer outcomes and to grow RateSetter.”
The platform recently announced the launch of its hire purchase product for consumer vehicle purchases and changes to its early withdrawal fees.