Investors are stuck as peer-to-peer seizes up

Peer-to-peer investors who want access to their money have been hit by withdrawal restrictions and additional fees as the coronavirus pandemic causes a crunch for the sector.

Two of the country’s biggest platforms, Funding Circle and Assetz Capital, have introduced new limits for investors.

Normally, customers are able to get access to their cash by selling their loans to other investors using a secondary market. However, the economic crisis engulfing the country has meant that few new investors are looking to take over existing loans.

Funding Circle has now closed its secondary market, which users have relied upon in the past. It said the move was a temporary measure, but warned that users could be blocked from selling loans for months.

The firm said customers would still receive interest payments on their outstanding investments and that this money could be withdrawn at any time. However, this would typically represent only 3pc to 5pc of an investor’s cash on the platform. The firm said it would review its position in the coming months.

Assetz Capital has imposed a membership fee equivalent to 0.9pc per year on all investments. The charge will be in place for three months and represents the latest coronavirus-related problem for customers of the platform. Last month, Telegraph Money reported that Assetz Capital investors faced long waits to get access to their cash.

Stuart Law, of Assetz Capital, said the new fee was vital to “ensure the long-term health of the platform”, given the increased costs it faced to monitor struggling borrowers.

Mr Law said: “We plan to reduce and eliminate this fee as soon as it is practical to do so, but for the time being a reduction in income from new lending needs to be addressed at a time of greater workload in servicing our existing borrowers.

“The fee has always been permitted in our terms and conditions, but we hope and expect that it will be a short-term measure.”

Peer-to-peer loans are typically made to fledgling businesses

Swathes of borrowers may be unable to repay their loans if economic conditions worsen

or to consumers to fund home improvements, car purchases, and other spending. However, there have been warnings that swathes of borrowers may be unable to repay their loans if economic conditions worsen. Platforms have taken steps to protect their investors by limiting the number of risky borrowers who can take out loans. Zopa, another peer-topeer website, said it had tightened its credit policy since the coronavirus outbreak began and will now lend only to customers it considers to be low risk. It has also started to charge those customers higher interest rates, which will protect investors’ returns. Zopa said it would review its lending policy in future, in line with market and economic conditions. Funding Circle said it had also tightened its rules for new borrowers and had strengthened its debt collection capabilities.

0.9pc Assetz Capital investors have been hit by a new charge