Investors may be left with some loans in their Assetz Capital access accounts that can’t be sold, the peer-to-peer lender has warned.
A note to investors from the business P2P lending platform said there has been a “steady increase” in loans that require money to be ringfenced in its provision fund to cover potential losses.
It said there has been a “steady decrease” in unallocated cash holdings in its provision fund, meaning there may not be enough to cover defaults and therefore loans that cannot be covered are no longer tradeable on its secondary market until there is enough money in the provision fund.
The note said that “at least in the short term” a small number of loans within the access accounts will become untradeable.
“That number could increase or decrease over time depending on the performance of the loan book and the ability of the provision funds to commence ringfencing again,” the platform added.
“You will not be able to sell your access account holdings in these untradeable loans unless they become tradeable again.
“This is in line with our existing disclosures in our provision fund policy but we wanted to write specifically to explain the situation.”
Assetz Capital said it is also exploring a potential alternative mechanism to ringfencing that would allow loans to remain tradeable even if there isn’t enough cash in the provision fund.
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