Easy access accounts on the decline amid regulatory scrutiny
Easy access accounts were once the norm among UK peer-to-peer lenders, but today just three platforms offer them.
Once feted as an answer to the question of liquidity, easy access accounts allow investors to withdraw their money at short notice, often within hours of making a withdrawal request. In return for this, the advertised returns are often lower than other accounts.
However, in recent years the number of easy access P2P accounts has dropped significantly, partly due to the consolidation of the P2P sector itself, and party due to stringent new regulations on how to handle retail investor money.
For example, in 2022 the Financial Conduct Authority (FCA) introduced new financial promotion rules for high-risk investments. P2P loans were included in this description. The rules require all platforms to post a warning to investors on their website, stating that “you may not be able to access your money easily and are unlikely to be protected if something goes wrong.”
The FCA has been notoriously particular about the wording of these risk warnings, and several platforms have opted to change the structure of their investment offerings in order to remain compliant.
While easy access accounts have fallen off, alternative liquidity solutions have been mooted. Secondary markets have been introduced to give investors a means of selling off their loan parts to other lenders. And many platforms allow investors to withdraw their money following a short notice period. This notice period can range from days to months, depending on the account in question.
Read more: 4th Way highlights 11 key P2P lending risks
But when it comes to the classic definition of an easy access account – a P2P investor account where money can be withdrawn or added at any time – there are just three options available today.
- easyMoney
The property lender has three different investor account options, which vary in terms of the minimum investment threshold and the returns offered. Target investor returns range from 5.28 per cent to eight per cent, with high net worth investors receiving the best rates.
On all three of easyMoney’s accounts, the lender offers the option to withdraw at any time. While instant access is not guaranteed, over the past 12 months the platform has made withdrawals available in less than 24 hours, on average.
- JustUs
JustUs offers four account options, one of which is an ‘access’ account where money can be withdrawn without any notice. The access account effectively acts as a cash holding account and pays interest equivalent to 1.2 per cent per annum.
However, in order to use the account, investors must choose at least one other investment option on the JustUs platform. The other accounts have much higher target returns, but come with a higher degree of risk. The ‘prudent’ account targets returns of up to 5.32 per cent per annum, while the ‘balanced’ account targets 8.13 per cent. The highest-risk option is the ‘adventurous’ account, which targets 10.98 per cent per year.
- Loanpad
Loanpad offers daily access to investor funds on two of its four accounts. The property lender has a classic account and an ISA-friendly version of its classic account, both of which target 4.8 per cent in annual returns. Investors can get daily access to these funds, although the platform says that “access times are based on expected market conditions and cannot be guaranteed.”
Loanpad’s other two accounts – the premium and ISA premium – require 60 days’ notice for withdrawals, and target 5.8 per cent in annual returns.
