Property-backed peer-to-peer lending platform Octopus Choice has permanently closed, almost a year after announcing it was suspending all transactions due to the impact of the pandemic.
The platform said that since the start of the Covid-19 crisis it has been unable to balance requests for withdrawals with demand for new investments. It added that “the P2P market more widely has seen reduced demand from retail investors following the introduction of new rules by the Financial Conduct Authority in 2019.”
It will seek to refinance portions of its loan book over the coming months, with a view to repaying its investors all of their capital and expected returns.
In a note on the Octopus Choice website, the platform said that since last March, more than £100m from 119 loans has been returned to investors, with no capital or interest lost. The platform does not expect to incur any other losses from the remaining loans on its portfolio.
“While liquidity is clearly important, we’re confident in the quality of the loans we have written and have not considered any options that would have resulted in any loss of capital or interest for Choice investors,” added Octopus Choice.
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On 18 March 2020, Octopus Choice paused all transactions on its platform, citing “extreme market conditions, with a high volume of investors trying to liquidate their investments.”
In an effort to address the lack of liquidity for investors, the platform waived its platform fee, meaning that the average returns on its loans increased from approximately four per cent to more than five per cent. The platform fee will be waived indefinitely as the platform exits the P2P lending business.
The remaining loans will be managed by the Octopus Real Estate team.