Withdrawal Fees
What is the Withdrawal Fee?
As a business, a proportion of our income is generated from new lending. In light of the impact of and the lessons learned from COVID-19 we feel that going forward it’s prudent to put in place a new and permanent fee in non-Normal Market Conditions only, where new lending levels may be lower. This fee would then create an important income stream to help support loan management costs and maintain the overall financial health of the platform during those times.
Effective as of 1st May 2021, the Withdrawal Fee of 1% per annum, or the equivalent of 0.08333333% per month will apply to investors making withdrawals from the Access Accounts (and Exit Accounts) on the amounts which are awaiting withdrawal but only when the accounts are not operating within Normal Market Conditions. Please see below for further details.
Whilst we anticipate that this fee will be sufficient in non-Normal Market Conditions, as ever, we reserve the right to change this fee in line with our terms and conditions.
You can find the full definition of Normal Market Conditions on our Key Investor Information page by clicking here.
How does the fee work?
The Withdrawal Fee is a charge of 1% per annum, calculated and applied monthly as described below, which will be deducted from an investor’s interest payment, whilst the Access Accounts are operating outside of Normal Market Conditions.
The fee only applies to the value of tradable loans that are being sold and withdrawn and is time-weighted, so investors will only be charged for the time they are actively withdrawing eligible funds. This means that investors will not be charged a fee whilst serving notice in the 30 Day and 90 Day Access Accounts.
For example, if an investor made a withdrawal request from the 30DAA and it took 5 days to fulfil their withdrawal request after serving their 30 days' notice period, they would only be charged the fee on the amount being withdrawn for 5 days.
Who does it apply to?
At present, in non-Normal Market Conditions the Withdrawal Fee will apply to:
- Access Account investors who have an active withdrawal request (providing it has served its notice period if applicable)
- Investors who have used the Exit Accounts and have listed their tradeable loan holdings for sale (rather than holding for the term of the loan)
Please note that this fee does not apply to:
- Manual Lending Account Investors
- Accounts that have been closed to new investment: Green Energy Account, Property Secured Account, Great British Business Accounts Series 1&2
- Funds held in your Cash Account
How is the Withdrawal Fee calculated?
It’s important to understand that the new Withdrawal Fee will work differently to the temporary Lender Membership Fee that applied during part of 2020 and into early 2021 due to the Covid-19 period.
Investors in the Access or Exit Accounts who have a withdrawal request, will be charged the fee on a daily basis using this formula:
(Amount being withdrawn x % of time being withdrawn) x 1%
Example
Let’s assume we are operating outside of Normal Market Conditions and an investor has a withdrawal request of £1,000 from the 30 Day Access Account (30DAA) for 15 days in an average 30 day month and receives the full target rate of 4% p.a. on their investment.
The Withdrawal Fee would be applied as follows:
As the fee is time weighted, the investor is only charged for the time they are withdrawing, which in this case is 50% of the month.
£1000 x 0.5 = £500 total amount of chargeable funds
Once we’ve worked out the amount of chargeable funds, we’ll then apply the Withdrawal Fee, which is 1% p.a. or 0.08333333% per month.
0.08333333% of £500 = £0.42 pence per month
Finally, we’ll deduct the fee from the total monthly interest earned (4% p.a. for the 30DAA)
£1000 x 0.04 /12 = £3.33
Therefore, the actual amount of interest paid to the investor is:
£3.33 - £0.42 = £2.91
How do you take the fee?
The Withdrawal Fee is calculated at the end of each month and will be deducted from the actual interest you receive.
If you’re investing across both standard and IFISA accounts they will be treated separately, therefore if you incur a fee in your IFISA account, it won’t be taken from interest in your standard account or vice versa.
Is the fee tax-deductible?
We’re unable to offer tax advice, however the fee will reduce the interest that you are paid. The reduced interest that you are paid will be shown on your tax statement. We recommend that you speak to a professional tax adviser if you are unsure.
How can I see what fees I’m being charged?
The fee will be taken from the actual interest paid which you can see in your account statement on your dashboard.
When will I need to pay the Withdrawal Fee?
The Withdrawal Fee is effective from 1st May 2021, with the first deductions taking place the following month. Once again, we would like to remind investors that this fee only applies to funds being withdrawn and only when we are operating outside of Normal Market Conditions.