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Understanding the risks

As with any investment, Octopus Choice does have certain risks. It’s important
you understand and are comfortable with these before you decide to invest.
You should also be sure to read our terms and conditions, too.

You can find out what measures we take to reduce the risks involved on our Managing Risks page arrow-right

Your money is at risk

Octopus Choice is not a cash savings account; your money will be invested in loans secured against property (both residential and commercial).

The ability to get all of your initial investment back or earn all of your interest is determined by the ability or willingness of the borrower to repay (which could be affected by fraud) and the underlying value of the asset (which could be affected by a material downturn in the property market). As such, we can’t guarantee that you will get all of your capital back, or earn all of your interest.

Your investment is not FSCS protected

It is important to know that P2P investments are not covered by the Financial Services Compensation Scheme (FSCS). Your capital and interest are at risk.

We can’t guarantee instant access

Though we’ll do our best to give you access to your money as quickly as possible, we can’t guarantee instant access.

This is because your money is invested in loans. Our ability to give you access before they've been fully repaid relies on other investors purchasing your investment in each loan.

If we can, we'll always try to buy your investments to speed up your withdrawal – but we can't guarantee this.

And it’s important to know that if one of your loans stops performing as it should, you won’t be able to withdraw the funds invested in that loan until it resolves – and if we have to take charge of the property, that could take some time.

There may be new tax rules in the future

The tax benefits for ISAs are available at the moment, but HMRC may change them at some point in the future, or the interpretation of the rules may change. The value of some benefits may also depend on personal circumstances.

Your investment could be affected by market conditions

Money invested through Octopus Choice is currently concentrated in a single asset class – namely, loans secured against residential and commercial property, predominantly in the South East of England (see our statistics page for more detailed info on our loanbook).

Though in time we might move into other similarly secured asset classes, until then, the value of the security underlying each loan will be determined by movements in the residential property market.

There are potential conflicts of interest

Octopus Investments does make similar types of secured loans available for investment by other customers through different products.

Sometimes you might even be investing alongside investors from other Octopus products in the same loan – but this won’t have any adverse effect as you’ll always hold the first charge.

Octopus also lends alongside our customers in each and every loan made available through Octopus Choice – and we earn a higher rate of interest on our own loan investments. This is because we invest in a ‘first loss’ position, whereby investors get all their initial investment back before we do, and also earn all of their interest before we earn any.

To make sure our investors are able to quickly put their money to work across a portfolio of loans, we use a ‘liquidity provider’ to fund all loans in advance. Think of it as building a warehouse of loans for you to invest in. This liquidity provider could be us or a third party – and it’s worth noting that they’ll generally receive a higher interest rate than investors for providing this service.

Our allocations committee aims to ensure that all potential conflicts are appropriately managed. And if there are any conflicts arising from a particular service that we can’t manage, then we won’t offer it – simple as that.

In the event of our insolvency, you could lose your ISA status

In the unlikely event that Octopus Co-Lend (the legal entity which offers Octopus Choice) falls into insolvency, the management of the product would be transferred to a third party that isn't an authorised ISA manager. While your loan agreements will remain enforceable, any money in your Octopus Choice ISA account will lose its ISA status, and subsequent interest earned will not be tax-free.

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Still have questions?