Client categorisation

When you apply to become an investor with FOLK2FOLK, one of the registration steps is to confirm your investor category. This is a regulatory requirement under FCA rules designed to ensure that you understand the risks associated with investing in high-risk investments like peer-to-peer (P2P) loans.

By categorising yourself appropriately, you confirm that you understand the nature of the investments and that you’re eligible to view and invest in the opportunities available on our platform.

Why does it matter?

Client categorisation isn’t just a formality, it determines whether you are eligible to invest via FOLK2FOLK.

If you cannot confidently assign yourself to one of the categories below, you will not be able to proceed with investing via our platform.

The four investor categories

There are four categories under FCA rules. When you apply, you’ll be asked to confirm which one applies to you.

1. High-Net-Worth Investor

You may categorise yourself as a High-Net-Worth Investor if either of the following apply:

• You had an annual income of £100,000 or more in the last financial year (excluding one-off pension withdrawals).
• You have net assets of £250,000 or more (excluding your home, pensions, and insurance rights).

2. Sophisticated Investor

This category applies if:

• You have received a certificate from an FCA-authorised firm within the last three years confirming your understanding of P2P loan risks.

You must name the authorised firm that issued your certificate. This firm can be FOLK2FOLK if you have passed our Appropriateness Test.

3. Self-Certified Sophisticated Investor

You can self-certify as sophisticated if any one of the following applies to you within the last two years:

• You’ve worked in finance and understand P2P lending products.
• You’ve been a director of a company with £1 million+ turnover.
• You’ve made two or more P2P investments. This can be through FOLK2FOLK.
• You’ve belonged to a business angel network for six months or more.

4. Restricted Investor

You can categorise yourself as a Restricted Investor if:

• In the past 12 months, you’ve invested less than 10% of your net assets in high-risk investments; and
• In the next 12 months, you intend to continue limiting high-risk investments to less than 10% of your net assets.

This category is often used by first-time or cautious investors. You’ll be asked to estimate these percentages and acknowledge the associated risk.