Octopus fully authorised as peer-to-peer lender

By Ryan Weeks on Monday 9 January 2017

Alternative Lending

Octopus Choice gets green light from the regulator in permissions saga’s latest twist.

Octopus Choice, a peer-to-peer offering launched by Octopus Investments in April of last year, has received full authorisation from the FCA. The news comes as the oldest and largest peer-to-peer lenders – such as Funding Circle, RateSetter and Zopa – continue to await word form the regulator.

From its inception, Choice has been billed by Octopus as the first truly “adviser friendly” peer-to-peer platform, and accordingly it won “Most IFA Friendly” in the 2016 AltFi Awards. The platform plugs investors and advisers into the existing deal flow of Octopus Property, a property lending business formerly known as Dragonfly Property Finance. Dragonfly has lent over £2bn since launching in 2009, with a very low default rate. Thus far, around £45m in property loans have been made available for investment on the Choice platform.

Octopus Investments manages more than £6bn of funds on behalf of 60,000 investors.

Choice’s full authorisation paves the way for the platform to launch an Innovative Finance ISA product, a privilege reserved for the fully authorised. The firm has advised that it will seek to launch an ISA wrapped peer-to-peer product later this year.

“While we’re currently working on an ISA version of the product that will be made available later this year, our primary focus is on giving the best possible service to the thousands of financial advisers and investors we’ve already attracted,” said Richard Wazacz (pictured above), head of Octopus Choice.

Octopus invests in 5 per cent of each and every loan that is listed on the Choice platform, in a first loss position. This means that it will lose its money prior to external investors in the event of a default.

While Octopus’ skin-in-the-game approach appears to have been deemed satisfactory by the regulator, not all applicants have had it so easy. Landbay, now fully authorised as a peer-to-peer lender, was forced to rejig its model in order to achieve full 36H permissions. Specifically, the firm had to stop pre-funding loans prior to their listing on the platform.  

So, if you’re in the market for full authorisation, remember: pre-funding bad, skin-in-the-game fine.

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Companies in this Article:

Funding Circle
Octopus Choice
Zopa Bank
Financial Conduct Authority

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