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Octopus’ P2P solution ‘Octopus Choice’ now available within a SIPP

Octopus Investments, part of Octopus Group, has announced that its peer-to-peer (P2P) investment platform, Octopus Choice, is now accessible within a SIPP wrapper.

Octopus Investments has partnered with specialist pension providers, Hartley Pensions (a Wilton Group Company) and Morgan Lloyd, who are the first providers to offer access to Octopus Choice within a SIPP (self-invested personal pension).

The move follows increasing demand from financial advisers and direct investors who want to access P2P lending within a tax efficient pension wrapper1. While P2P is considered a ‘non-standard’ investment for SIPPs (not covered by the FSCS, with capital and liquidity risk), Octopus hopes to grow the number of financial advisers offering P2P as part of the financial planning process.

Octopus Choice is a property backed P2P lending platform launched in 2016 and developed by Octopus Investments with advisers in mind. It now has over 1500 advisers signed up across the UK and over £250 million currently under management. To date it has generated nearly £15 million of interest for its investors, who have also withdrawn more than £134m successfully2.

The SIPP market is growing rapidly. A July 2018 study from GlobalData, citing figures from the Association of British Insurers, highlighted that the SIPP market had grown by 60% since 2016 and is now worth £2.4 billion3. SIPPs are increasingly viewed as an attractive option, particularly following the introduction of pension freedoms in 2015, as holders are able to actively choose and manage their investments.

Charlie Taylor, Head of Octopus Choice, comments:

“We’re delighted to partner with Morgan Lloyd and Hartley Pensions and give their customers access to Octopus Choice within a SIPP. It’s something many advisers and their clients have been asking for, so it’s great to be able to give them this option.

“Property backed peer-to-peer lending is an alternative asset class that aims to offer lower volatility than equity markets and targets regular income. Octopus Choice, for example, aims for the equivalent of 4% per annum. These qualities can make it an attractive option for certain people, comfortable with the risks of the asset class, who want to diversify their SIPP portfolio.”

Michael Baber, Technical Director at Hartley Pensions, comments:

“We’ve been working with Octopus for some time now and we are very pleased to be partnering with such a forward-thinking company to provide this solution to new and existing clients.”

John Dowding, Technical Director at Morgan Lloyd, comments:

“It is a fantastic opportunity to join forces with Octopus to promote the valuable benefits that P2P investments offer our SIPP clients. This could be a great product for SIPP clients looking to diversify their investments and for those looking to target a regular and consistent income stream, particularly for some clients when entering drawdown.”

More about Octopus Choice

  • Minimum investment is £10
  • Loan breakdown – 65% buy-to-let properties, 17% for bridge-to-let, 15% for commercial and 3% for bridging loans
  • Funded almost 700 loans to date incurring zero capital losses
  • Octopus underwrites every transaction including a full review of the borrower and the property
  • Mitigating risk – Octopus lends a maximum of 76% LTV, with an average LTV of 63%, secured against the underlying property
  • Mitigating risk of capital loss – Octopus has a first charge on the property that secures every loan
  • Aligning interests – Octopus co-invests in every loan, and stands to lose all its invested capital before investors lose any
  • Octopus Choice is also available through an Innovative Finance ISA wrapper

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Notes to Editors:

1) HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen

2) Figure correct as of 26th September 2019

3) Global DataUK Self-Invested Personal Pensions 2018

Investment performance

Data shows 12-month discrete periods to 30 June 2019 (01 July – 30 June), the most recent 12-month period. Octopus Choice launched in January 2016, so we are not able to provide 12-month discrete periods prior to periods shown.

 

Amount invested

 

Total interest earned by investors

 

Average interest rate1

 

Amount withdrawn

 

2019

£154.4m

£8.2m

4.05%

£72.7m

2018

£130.5m

£4.2m

4.17%

£33.8m

2017

£70.0m

£1.1m

4.43%

£10.1m

1) The average interest rate is the average rate of return investors received across all open loans for the period.

Loanbook performance to date

 

Average proportion of live loanbook that’s non-performing at the end of each month1

 

Number of loans passed to debt collection

 

Amount of investor interest lost2

 

Amount of investor capital lost3

 

2019

7.03%

1

£6,902.61

£0

2018

2.78%

6

£0

£0

2017

0.00%

0

£0

£0

1) At the end of each month we count the number of non-performing loans (where the borrower has missed two successive interest payments or failed to repay at the end of the term) and calculate them as a percentage of all open loans. The figures here show the average of each year’s monthly percentages.

2) Amount of investor interest lost shows the interest accrued on loans which investors did not receive. This occurs when it is not possible to recover all the accrued interest when loans are passed to collection.

3) Amount of investor capital lost shows the total value of losses to the initial investments made by all Choice investors. This occurs when it is not possible to recover the capital on loans when they are passed to collection.

For journalists in their professional capacity only. The value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. Past performance is not a reliable indicator of future results. Money invested through Octopus Choice is concentrated in loans backed by property and could be affected by market conditions. For the same reason, instant access to invested capital cannot be guaranteed. Peer-to-peer investments are not protected by the Financial Services Compensation Scheme (FSCS). Personal opinions may change and should not be seen as advice or a recommendation. We do not offer investment or tax advice. We recommend investors seek professional advice before deciding to invest. Octopus Choice is provided by Octopus Co-Lend Limited, which is authorised and regulated by the Financial Conduct Authority (722801). Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 3942880. Issued October 2019.