How do you manage any conflicts of interest?
We treat all our customers fairly and don’t favour new customers over old, or vice versa. We deal with all requests to deposit or withdraw money on a strictly first-come, first-served basis.
We do make similar types of secured loans available for investment by other customers, through different products – but loans are allocated between these different products according to agreed criteria and overseen by a separate allocations committee.
We also lend alongside our customers and put our investment at risk before yours, to align our interests. Because you get your initial investment back before us, and also earn your share of the interest first, we earn a higher rate of interest on our loan investments.
We think it’s a fair way of giving you a great rate, all the while knowing that your money is invested in secured loans that we source, administer and invest in, too.
What happens if a borrower fails to repay their loan?
We have a clear process for dealing with missed payments. First, we notify the borrower and their solicitor of our intention to instruct lawyers. Our experience shows that most non-performing loans are resolved with the threat of legal action, without having to escalate further.
However, if the borrower continues to delay repayment, we’ll begin legal proceedings and, if necessary, will repossess the property to recover what’s owed to you.
Remember, in the case of residential property we never lend more than 75% of the value of the property (or, if the borrower chooses to add arrangement fees to the loan itself, 76%) – giving a 25% cushion against any fall in the value of the property. For commercial property, we never lend more than 65% of the value of the property.
While you won’t be able to access the money that’s invested in that loan, you’ll continue to accrue interest on it. The interest you accrue will be paid to you once the loan recovers or an alternative resolution has been reached with the borrower. Remember, Octopus Choice puts your capital at risk. We can’t guarantee that you will receive all of your capital or interest is the loan is unable to repay the loan. The value of your investment, and any income from it, can fall or rise and you may not get back the full amount you invest.