FUNDING Circle investors no longer have the option to manually choose which businesses to lend to and which loans to sell.
The peer-to-peer business lender announced last month that it was scrapping the function and would launch an updated version of its autobid and autosell lending tools, with the changes coming into effect on 18 September.
Investors now have two new lending options. ‘Balanced’ invests in the full risk spectrum of Funding Circle loans and offers projected annual returns of 7.5 per cent after fees and bad debt. The ‘Conservative’ option invests in lower-risk businesses and is expected to deliver annual returns of 4.8 per cent after fees and bad debt.
As part of the changes, Funding Circle has re-vamped the investor account segment of its website, with updated information on the lending settings page.
The platform launched its new sell page on 21 August and has now withdrawn the option to sell individual loans.
“We expect liquidity to remain strong on the platform so you can access your money quickly, although this can’t be guaranteed,” Funding Circle said in a blog post on its website on Monday.
The firm said that investors will have received an email over the past four weeks informing them what they need to do to comply with the changes.
Funding Circle’s decision to scrap manual lending has provoked debate from the industry and investors alike. Stuart Law, chief executive of Assetz Capital, has argued that manual lending is a “compelling differentiator” for the sector, while some retail investors used the P2P Independent Forum to air their concerns that the platform was discriminating against the mature investors who knew how to use the manual bidding system to achieve the best possible returns.
Read more: Autobid vs manual: Which is truly P2P?
However, Neil Faulkner, chief executive and founder of P2P analysis firm 4th Way, says that an autobid function increases diversification and is likely to save a lot of investors from disappointing results.
Fellow ‘big three’ lenders Zopa and RateSetter offer automatic allocations as a way to spread risk. And Funding Circle said at the time of August’s announcement that 73 per cent of new investors already chose the autobid function.