Key Investor Information
Investing is a balance of risk versus reward. In the case of our accounts, you lend your money to businesses and your reward is the interest they pay you. It's a fair deal. But there's always a risk that they might not be able to pay back the money they borrow, leading to a reliance on the security backing the loan. This means it's important that you're clear what 'risk' means and how much you're prepared to take.
Read our Key Investor Information below to understand more about the main risks and how we help you minimise them.Defaults & Losses Terms & Conditions
What you need to know
We want you to invest with your eyes open. So before you do anything, there are some things we want to make you aware of.
Your capital is at risk
This is an investment account, not a bank account. As with all peer-to-peer lending there is no guarantee you’ll get back what you put in. We try to give you a rough idea what kind of losses to expect, but these figures are estimates.
All of our accounts, apart from the Manual Lending Account, have discretionary Provision Funds, which aim to protect investors from losses to interest and/or capital. Our Provision Funds are discretionary and could become depleted over time if too many loans run into difficulty so the presence of a Provision Fund cannot guarantee that no losses will be suffered.
We are not protected by the FSCS
Like all peer-to-peer lending platforms, we're not covered by the Financial Services Compensation Scheme (FSCS). This means that, if we go out of business for any reason, our investors can't get their money back from the FSCS.
However, that doesn't necessarily mean you'd lose your money. If we did go out of business, the underlying loan agreement would still be in place between you and the business that borrowed your money, as would the security against the loan. And, because we're regulated by the FCA, we have what's called a ‘wind-down plan’ in place, which makes sure that our business and our loan book should be subject to an orderly wind-down should Assetz Capital fail.
Past performance does not guarantee future performance
We've probably all seen this phrase a lot. It basically means that what happened in the past can't help us predict the future. As an example, an investment might have performed well historically, but that doesn't mean it will always do so.
We do our best to predict potential returns and losses, but we can't guarantee anything. You'll need to weigh up the potential returns against the potential losses and reach your own judgement about whether an investment is right for you.
Target interest rates
The advertised target interest rates on our Access Accounts are quoted gross (before tax and any possible losses) and are per annum. They’re also capped at the target rate, which means that you could earn less but you can’t earn more.
You can find these target rates along with more information on each of the account pages.
Don't forget your taxes
We don't deduct any tax at source, so you'll need to make sure you know how much tax you have to pay to HMRC, and when you need to pay it. We can't advise you on this, so if you're unsure, we recommend that you talk to a professional tax adviser.
Normal market conditions
“Normal market conditions” means conditions that are broadly what we have at the moment. Economic conditions are reasonably stable, our lenders are making withdrawals from the ‘Access Accounts’ (Quick Access, 30 Day Access & 90 Day Access Accounts) in the normal course of business and other lenders are willing and able to buy their loan units through those accounts and others that we offer. Our Access Accounts also hold a certain amount of cash “liquid” to help increase the liquidity of withdrawal requests above and beyond normal market supply and demand. So far, all lender withdrawal requests have been carried out when they requested since the accounts opened for investment.
However, past performance doesn’t guarantee future performance and abnormal market conditions could possibly change the speed of withdrawals. Abnormal market conditions would be if there was a very large, sudden and extended demand to withdraw cash from the Access Accounts. This might be caused by a global recession, an abrupt and widespread loss of faith in peer-to-peer lending or a number of other situations. Therefore if a significant number of lenders chose to withdraw their cash in significant quantities and no (or few) new lenders were available to buy their loan parts, conditions would at that point be abnormal and the Access Accounts would not be then able to maintain their current speed of access for withdrawals.
Ultimately this could mean that lenders may have to wait until a buyer could be found for their loans held within the Access Accounts, or until the loans were repaid over time by the borrowers (through monthly repayments made by borrowers or by loans naturally reaching the end of their term for full repayment). The repayment of loans should continue to create some capital which would be available for withdrawal by investors regardless of market conditions being abnormal.
This is the reason that we quote the “in normal market conditions” message everywhere that we refer to Access Account withdrawal times; we can’t guarantee access times in all possible economic scenarios and we want our lenders to understand that.
To help to reduce the risk of loss, all our loans hold borrowers' assets as security. The vast majority of our loans are secured by one or more of the following: property, land, equipment, stock, machinery, debtors or other assets. So, if the borrower can't pay back the loan, we can use these assets to get back some or all of the money they owe you. It’s worth noting that the value of security can vary over the lifetime of the loan so even with loan security it is not possible to be certain that there will never be a loss.
We publish the ‘Loan to Value’ (LTV) or ‘Loan to Gross Development Value’ (LTGDV – in the case of a construction or development) on every loan. This helps to provide an indication of the loan value, versus the value of the security. You can view the full details of any security taken in the credit report.
For more information about how peer-to-peer lending works and the role Assetz Capital plays in it, please click below.How it works
How we assess our borrowers
Assetz Capital has a team of pro-active Relationship Directors who are happy to meet potential businesses that require funding. They are supported by a highly experienced, time served, Credit team, and between them they look to apply real world, common sense principles alongside financial metrics.
There are some key questions that we look to ask when lending:
- Do we understand the entity to whom we are asked to lend and do they have relevant experience?
- Are we secured at an appropriate level for the deal proposed?
- Can we follow the monies advanced to its intended purpose? Is the amount sufficient? And the purpose acceptable?
- Can the borrower service the repayments with sufficient headroom?
- Is the proposed exit deemed realistic and achievable?
Once in possession of this information we will decide if this is an appropriate risk to place to lenders. In the vast majority of cases we will have met the potential borrower and viewed the asset offered as security.
When considering development funding we prefer to fully fund from the outset including interest costs. The questions above will apply although equally important is whether we are building the right property for the location, and how long it will take the properties to be absorbed into the market place through sales.