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4. Investing with LendInvest
Is my investment guaranteed?
No. Investing in our loans is not a risk-free investment and LendInvest does not guarantee that your capital will be returned.
Is my investment secured?
No, your investment is not secured. Your investment is in a loan secured on property. This means that if the borrower fails to repay their loan, LendInvest can seek to recover any outstanding amounts by enforcing the security and taking possession of the property.
What happens to my investment if LendInvest stops operating?
We have a number of precautionary systems in place to protect investors and borrowers in the event that LendInvest stops operating. These include:
Loan servicing partner
All the loans that we originate and approve are serviced by the LendInvest team in partnership with a dedicated team at Pepper UK, part of the Pepper Group, a global loan servicing company that manages over £32 billion of assets across its servicing and lending businesses on behalf of 600,000 customers around the world. In the event that LendInvest was to stop operating, Pepper UK would continue to service borrowers’ loans as normal.
Segregated client account
We hold platform investors’ money in a segregated client account with Barclays Bank plc. If LendInvest were to become insolvent, an insolvency practitioner would be appointed to distribute the funds in the segregated client account back to platform investors. Money held in the segregated client account would not be distributed to our other creditors.
The security we obtain over the property is held under a separate trustee structure for the benefit of lender. This structure allows us to minimise any costs as well as management of the different securities.
Can I include my Lendinvest loan investment into an ISA or a SIPP?
Investments that are made available on our platform are structured as Alternative Investment Funds which are regulated by the FCA. Alternative Investment Funds are not able to be included in any of the currently available ISA wrappers.
The LendInvest listed bonds are investment products that are publicly traded and can be included as part of a stocks and shares ISA allowance. You can find more information on the LendInvest listed bonds here.
Should I seek professional advice regarding investments?
If you require guidance, you should seek advice from an independent financial adviser, solicitor and/or accountant. LendInvest and LendInvest Funds Management do not offer any legal, accounting, tax or investment advice.
How much can I expect to make on my investments?
Your expected income (sometimes referred to as interest or return) differs, depending on (1) the investment product through which you are investing in LendInvest loans (for instance, a fund or our platform), and (2) the individual loan you have chosen to invest in (if you are investing via our co-investment platform).
Is the income that I earn net of tax?
No. The income (sometimes referred to as “interest” or “return”) you earn is gross of tax. You are responsible for your own tax affairs.
How does the platform actually work?
Once fully registered on the platform, investors add money to their online account before selecting loans into which they wish to invest. Every loan is subject to different durations and available returns, depending on the circumstances in which the loan has been approved by our experienced underwriting team. Investors receive monthly returns on their investment and only receive back the capital they invested at the point at which the loan is repaid by the borrower.
Does LendInvest operate a secondary market?
What am I investing in?
An investment on our platform is an investment in an alternative investment fund connected to a specific loan secured against property. While the alternative investment fund is an unregulated fund structure, the investments are managed by our Alternative Investment Fund Manager, LendInvest Funds Management Ltd, which is authorised and regulated by the Financial Conduct Authority.
Is my exposure to LendInvest as a whole covered by the Financial Services Compensation Scheme (FSCS)?
No, investments on our platform and any uninvested funds held in your wallet are not savings products, and are not covered by the UK Financial Services Compensation Scheme (FSCS) in the way that a bank deposit would be.
A financial adviser can give investment advice based on your personal circumstances, and help you to make an informed judgement about the merits of investing alongside the associated risks.
In short, we recommend you consider any unregulated alternative investments on the assumption that no FSCS protection applies.
There are limited and specific circumstances in which you may be able to make a claim under FSCS. The FSCS deals with compensation claims if certain financial firms go out of business, up to £85,000 per eligible person, per firm.
There are a number of qualifying conditions which must all be met, including (but not limited to):
- You must be an eligible claimant
- You must have a protected claim – e.g. the firm in default was regulated and owes you a civil liability in relation to a regulated activity
It can be complicated for the FSCS to determine whether or not a ‘regulated activity’ took place. It may take the FSCS time to determine, as it may require a detailed case-by-case legal analysis.
LendInvest plc is not a regulated firm.
LendInvest Platform Limited is not a regulated firm.
LendInvest Funds Management Limited is authorised and regulated by the Financial Conduct Authority to manage the unauthorised (unregulated) alternative investment funds constituted by investments on our online investment platform into Receivables Participation Agreements (RPAs) with economic exposure to the underlying loans.