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Lender's Risk Summary

Estimated reading time: 2 min
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
What are the key risks?
  1. You could lose the money you invest
    • Many peer-to-peer (P2P) loans are made to borrowers who can't borrow money from traditional lenders such as banks. These borrowers have a higher risk of not paying you back.
    • Advertised rates of return aren't guaranteed. If a borrower doesn't pay you back as agreed, you could earn less money than expected. A higher advertised rate of return means a higher risk of losing your money.
    • These investments can be held in an Innovative Finance ISA (IFISA). An IFISA does not reduce the risk of the investment or protect you from losses, so you can still lose all your money. It only means that any potential gains from your investment will be tax free.
  2. You are unlikely to get your money back quickly
    • Some P2P loans last for several years. You should be prepared to wait for your money to be returned even if the borrower repays on time.
    • Some platforms may give you the opportunity to sell your investment early through a 'secondary market', but there is no guarantee you will be able to find someone willing to buy.
    • Even if your agreement is advertised as affording early access to your money, you will only get your money early if someone else wants to buy your loan(s). If no one wants to buy, it could take longer to get your money back.
  3. Don't put all your eggs in one basket
    • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    • A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
  4. The P2P platform could fail
    • If the platform fails, it may be impossible for you to collect money on your loan. It could take years to get your money back, or you may not get it back at all. Even if the platform has plans in place to prevent this, they may not work in a disorderly failure
  5. You are unlikely to be protected if something goes wrong
    • The Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover investments in P2P loans. You may be able to claim if you received regulated advice to invest in P2P, and the adviser has since failed. Try the FSCS investment protection checker here.
    • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated platform, FOS may be able to consider it. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA's website here.

For further information about investment-based crowdfunding, visit the FCA's website here.

Lender Risks

The terms used in this risk statement are defined in The Money Platform's Terms of Service.

Peer-to-Peer Lending

When a loan is funded by Peer-to-Peer Lenders, the Loan Contract is between the Borrower and the relevant Lender or Lenders. The Money Platform operates the platform and administers the Loan Contract on behalf of the Lender or Lenders. Some loans are funded directly by Gracombex Ltd trading as The Money Platform using its own funds. These loans do not involve Peer-to-Peer Lenders and form part of Gracombex Ltd’s assets.

Wind-Down Arrangements

The Money Platform has a Wind-Down Plan in place for the event that it ceases originating new loans or ceases trading. If The Money Platform were to enter wind-down, new lending and new Peer-to-Peer Lender funding would cease while existing Loan Contracts continue to be administered. Borrower repayments, collections, customer support and applicable Peer-to-Peer Lender payments and withdrawals would continue to be managed. Peer-to-Peer-funded Loan Contracts would continue to be administered in accordance with our Wind-Down Plan. Borrower repayments would continue to be collected and allocated to the relevant Lender or Lenders in accordance with the applicable agreements and client money arrangements. Loans funded directly by Gracombex Ltd using its own funds are assets of Gracombex Ltd and are also covered by our Wind-Down Plan, including arrangements for their continued servicing and collection.

Your Money Before It Is Lent

Money deposited by Peer-to-Peer Lenders but not yet allocated to a loan is held as client money in a segregated client bank account, separate from The Money Platform’s own funds. Once Peer-to-Peer Lender funds are allocated to a loan, the money is advanced to the Borrower under the applicable Loan Contract. Repayments received in respect of Peer-to-Peer-funded loans are processed and allocated to the relevant Lender or Lenders in accordance with the Loan Contract and our client money arrangements.

Borrower Checks

Before a loan is approved, we carry out identity, creditworthiness, affordability and fraud checks on the Borrower. These checks use information including credit reference agency data and information provided by the Borrower. These checks are intended to assess whether a Borrower meets our lending criteria, but they do not guarantee that the Borrower will make all repayments due under the Loan Contract.

Loan Performance

For information about the performance of loans facilitated through The Money Platform, including historical default information, please see our Outcomes Statement.

Financial Services Compensation Scheme

A Peer-to-Peer agreement is not protected by the Financial Services Compensation Scheme. This means the FSCS does not compensate a Lender simply because a Borrower fails to repay a P2P loan or the investment performs poorly. Cash held for a Lender as client money may be eligible for FSCS protection if the bank holding that money fails, depending on the applicable FSCS rules and the Lender’s eligibility.

Capital At Risk

Peer-to-Peer lending is unsecured. Borrowers may fail to repay some or all of the money they owe. Your capital is at risk and returns are not guaranteed. You should only invest money that you can afford to lose.

The Money Platform

The Money Platform is a trading name for Gracombex Ltd (company no. 9413521) and our registered offices are at:

Wework Swan House, 33 Queen Street, London, EC4R 1BR.
Gracombex Ltd is authorised and regulated by the Financial
Conduct Authority (Ref. 716455).
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Data Protection Registration Number ZA099774.

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