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New Choice General Terms & Conditions

Posted on 05/12/2018, by Cora Thomas

Octopus Choice: lender terms and conditions (DRAFT)

General Account terms

1.    Some housekeeping…

1.1  These terms and conditions are between you and Octopus Co-Lend Limited (authorised and regulated by the Financial Conduct Authority with firm reference number 722801), the company which manages Octopus Choice.

 

1.2  By creating an account through the Octopus Choice website or app, you’re acknowledging that you agree to the terms and conditions – and so it’s really important that you have a good read before creating an account with us. Make sure you’ve read and are comfortable with our Privacy Policy[GG1]  and Risk Statement[GG2] , too, and are sure that this is the right investment for you.

 

1.3  We’ll let you know of any meaningful changes to the terms and conditions within 30 days of them coming into force.

 

1.4  Remember, we don’t provide tax or investment advice. If you’re unsure about the tax or investment implications of using Octopus Choice, you should speak to an adviser.

 

1.5  Only those over the age of 18 can invest through Octopus Choice, and we reserve the right to reject an application.

 

1.6  We’re not responsible for any outcome of you providing us with false, inaccurate or incomplete information. Nor are we liable for any other losses arising from your investment with Octopus Choice, or your failure to keep your account details secure.

 

1.7  Oh, and to be absolutely clear: English law applies.

 

2.    How to contact us – and how we might contact you

2.1  You can email us at support@octopuschoice.com, give us a call on 0800 294 6848, or write to us at Octopus Choice, 33 Holborn, EC1N 2HT. You can also pop in to see us there, too – we always like to put a face to the name!

 

2.2  We might contact you about your account by email, post or phone number (or through messages displayed on your online account or mobile app). Please let us know if any of your contact details change.

 

2.3  We hope you’ll never have to make a complaint. But if you are unhappy, do tell us (in whatever way you prefer), and we’ll do our best to put it right. There’s more info on how you can make a complaint, and how we’d handle it, here[GG3] .

 

3.    What is Octopus Choice?

3.1  Octopus Choice is a ‘peer-to-peer’ (P2P) lending product that lets you invest in a portfolio of loans, to target an attractive rate of interest.

 

3.2  You can invest by debit card, bank transfer or cheque – but you should be aware that we allow five working days for cheques to clear, so the first two will be the quicker option. We also only accept money from UK bank accounts regulated by the Prudential Regulation Authority (PRA) – you can see their full list here[GG4] .

 

3.3  We manage your portfolio on your behalf as your ‘agent’. This essentially means you’re trusting us to do the hard work for you in acquiring P2P loans, pursuing arrears and enforcing security on your behalf – just like an investment manager. We’ll do our best to get your funds invested as quickly as possible, but we can’t guarantee that it’ll happen straight away.

 

3.4  We may, at any time and at our discretion, prevent you from committing funds to your portfolio.

 

4.    How we build your portfolio

4.1  By accepting these terms, you’re giving us a mandate to lend your money directly to borrowers. We do this by entering into contractual loan agreements with them on your behalf. These are called P2P agreements, because they’re made between one peer (you, the lender) and another (them, the borrower), through us. For more information see our FAQ[GG5] .

 

4.2  There’s more detail on how we go about building your portfolio here[GG6] , but importantly we’ll always aim to spread investments of £100 or more over a minimum of 10 loans.

 

5.    Your target interest rate

5.1  Your overall target interest rate is a blend of the individual investor interest rates that each loan in your portfolio pays. Remember, neither your interest or your initial investment is guaranteed. For more information see our FAQ[GG7] .

 

5.2  To get your money earning interest as quickly as we can, we might lend it out to borrowers on your behalf before we actually receive it from you. For example, if you invest using a debit card, it can take a few days before the funds reach our bank account – but rather than waiting, we might ‘pre-fund’ your Octopus Choice account out of our own money, then withdraw it again when the payment clears.

 

6.    Interest payments

6.1  We pay interest to our investors on the same day each month – currently the 15th, but we’ll let you know if that changes.

 

6.2  But, as you’d expect, each borrower might pay the interest on their loan at a different time – and some might even pay it back at the end of the term, along with the loan itself.

 

To smooth it all out and ensure investors get the right proportion of interest they’re owed each month, we’ll sometimes pay interest out of our own money. We’re essentially lending you that interest up front, and so we have the right take all the interest when it’s eventually paid by the borrower (otherwise you’d be paid twice).

 

6.3  If the borrower ends up not being able to pay interest that we’ve already paid to you, we’ll have to take that interest back (by recouping the amount from the borrower – see clause 10.2 for more details).

 

7.    We put our money where our mouth is

7.1  When you invest through Octopus Choice, Octopus will also lend with you in each and every loan – and on a ‘first loss’ basis. We do this using an entity called ‘Octopus First Loss Ltd’.

 

7.2  You’ll get all of your initial sum back before us. And you’ll also earn all the interest you’re due before we’d earn a penny of ours. There’s more info on this on our Managing Risks[GG8]  page.

 

8.    How we make our money

8.1  Because our loan investments are made at higher risk, we’ll earn a higher interest rate. We’ll also earn a fee from the borrower for administering their loan. The exact fee will vary, but it’ll never exceed 0.35% a month. We’ll also earn a fee for arranging the loan – and might also earn extra fees if they repay the loan early, or if they choose to extend it.

 

8.2  Taken together, this means that the interest rate that a borrower pays will be higher than the interest rate that you’ll earn. We make this clear on a loan-by-loan basis on our Statistics’ [GG9] page, for the whole world to see.

 

9.    Security

9.1  Every loan that we make available for investment is secured against an asset with a ‘first legal charge’ – typically residential or commercial property. This means that you’re legally entitled to recouping some of the value of that asset if the borrower becomes unable to repay.

 

9.2  By using our service you’re appointing Octopus Co-Lend Ltd (the company which manages Octopus Choice) to act as ‘Security Trustee’ on your behalf.

 

9.3  In other words, if a borrower fails to repay their loan, or pay the interest on it, we’ll chase down what’s owed for you. If necessary, we’ll repossess and sell the asset that the loan’s secured against, so that we can recover as much as possible of what you’re owed.

 

10.What happens if a borrower stops paying?

10.1        If borrowers fail to repay their loan or stop paying interest – or let us know that they’re going to be unable to – we’ll aim to recover as much as we can for you as quickly as we can, while treating both parties (borrowers and lenders) fairly. In most cases we’ll instruct a third-party solicitor to pursue the debt and, where necessary, will enforce the security on your behalf.

 

10.2        Assuming funds are recovered, we’ll first pay the third-party administrator and security trustees their reasonable recovery costs, as well as cover our own costs of managing the platform during the default.

 

We’ll then pay ourselves any interest that we’d pre-funded you ahead of it actually being paid to us by the borrower (see clause 6.2 above), before paying out the remaining proceeds, for the portion of the loan that you hold, in the following order:

 

1.     First you’ll get back your initial investment

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