Investors using the FundingKnight platform do not invest in FundingKnight itself. Our business is funded by our shareholders and our fee income.
When you add any money to your account it is held in a segregated client account, which means that the bank knows and has acknowledged that any money in this account is ring-fenced and does not belong to FundingKnight, but belongs to our investors. The client account is administered following the rules set out by the Financial Conduct Authority for managing client assets. In the event that the bank holding your funds should get into difficulties then your cash is protected by the Financial Services Compensation Scheme, even if you have committed it in our auctions. You can find out more information about the Financial Services Compensation Scheme on their website: www.fscs.org.uk.
When you make a loan, this is between you and the borrower, with FundingKnight handling the administration. Unlike your funds held in the client account, your loan investments are not covered by the Financial Services Compensation Scheme, which is why we strongly recommend diversifying across a wide range of loans and borrowers. FundingKnight does not directly invest in any loans, though our management team and shareholders do, but only on the same terms as all other investors. In the event of a default FundingKnight investors are in the same position as all other investors.
There is a priority on funds received from borrowers before money is payable to investors
- Our fees to the borrower for administering loans are chargeable before any funds are payable to investors.
- Where we have instructed lawyers or debt administration agents to act of investors’ behalf to pursue problem loans, their fees are payable first.