Sourced operates an electronic platform (the "Platform") which enables you the investor, to invest in loan contracts with borrowers within a peer-to-peer lending environment. Peer-to-peer lending carries risk, some of the key risks are detailed below:
This is the risk that you may lose the capital you have invested. All loans made through the Platform are secured against UK property, however your capital is at risk. Property prices can go down as well as up and different property types or those in different areas may be more or less susceptible to reduced or negative growth. You should not invest more money through the Platform than you can afford to lose. In the event you suffer a loss of capital, you are not entitled to compensation from the Financial Services Compensation Scheme (FSCS).
This is the risk that a borrower may not repay all or part of a loan, and that you may lose the capital you have invested, or the interest associated with it. Whilst Sourced has a robust risk assessment process with all borrowers and property being vetted before any loans are finalised, the risk a borrower may default is real. All loans made through the Platform are secured against UK property by way of a first legal charge to protect you if a default does occur.
This is the risk that the security taken against each loan (in all instanced UK property), may provide inadequate cover for the total capital and interest due to you, under the terms of your investment on the Platform.
This is the risk that you will be unable to gain quick access to the capital you have invested and the interest you are due to earn as the lender. The Platform does not operate a secondary market function and you therefore are unable to sell loan parts to other investors, and you must wait until the loan reaches maturity and repayment before you can withdraw these funds.
This is the risk if Sourced, as the Platform operator, were to stop trading for any reason there would be a risk that we would no longer be able to manage borrower repayments to you. Should it be necessary, contingency plans are in place for a third party to take over the administration of the loans to ensure orderly repayment of capital and interest. Sourced operates a Client bank account which allows for our funds and investor funds to be segregated. Unallocated investor funds are held in trust on your behalf by Barclays Bank PLC. Your money therefore does not form part of our assets and would not be available to creditors in the event of insolvency.
This is the risk that you increase your exposure through the lack of diversified investment. Diversification means the ability to spread risk by investing in more than one loan and choosing different loan parameters such as: loan to value (LTV), type of borrower and length of loan.
This is the risk that past performance is no indication of future performance. The value of property may do down as well as up and you may lose the capital you have invested.
If you are in any doubt about; the loan you are investing in, the borrower or the underlying property asset, you should obtain independent advice first.