Assetz restricts withdrawals and pauses new lending from access accounts
Assetz Capital has restricted withdrawals from its access accounts after withdrawals outpaced new investment.
The platform stated that a lack of new investment in these accounts could mean that ongoing property developments will be unable to access new tranches of funding, which could lead to project delays and investor losses.
In order to avoid this, the peer-to-peer lending platform has started to “carefully manage withdrawals from the access accounts to prioritise all existing development loans being fully funded to completion”.
The platform will not fund any new loans from the access accounts for approximately 12 months.
Stuart Law (pictured), chief executive of Assetz Capital, told investors that the platform has seen a spike in withdrawal activity in recent weeks, while new investment activity has declined. Law blamed this on rising interest rates which have led access accounts to become “less competitive”.
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“We recently raised the rates on the access accounts and saw healthy net inflows of capital for a period,” he said. “However, after continued interest rate rises, the access accounts are not now attracting further new capital on a net weekly basis, and we instead are seeing modest net outflows.”
Law added that if this was allowed to continue, then existing loans within the accounts that had future funding commitments, such as development loans with monthly drawdown requirements, may not be in a position to be funded.
“In order to avoid that situation, we have taken the difficult decision to start to carefully manage withdrawals from the access accounts to prioritise all existing development loans being fully funded to completion,” Law said.
He later clarified that Assetz has “only paused new lending from the access accounts that was a very low figure recently in any case”.
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Effective immediately, all withdrawal requests from the access accounts will need to be matched to new investment coming into the account. Investors seeking to withdraw their money will be placed in a queue, and their money will be returned once an equivalent amount is invested.
For example, if a new investor wished to invest £1,000 into the access accounts, they would replace the next queued investor/s wishing to withdraw £1,000.
“A queue of withdrawal requests will be in operation, sorted by date of request plus any notice requirement,” Law explained. “For example, a quick access account withdrawal request would be immediately added to the back of the queue and a 90 day access account would be added to the back of the queue 90 days after the withdrawal request.”
Assetz expects this process to continue for around 12 months, unless circumstances change. No new loans will be funded by the access accounts while these restrictions are in place.
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