As part of investing in a regulated environment on Mintos, investors benefit from having access to an investor compensation scheme.
What’s an investor compensation scheme?
An investor compensation scheme provides investors with compensation if Mintos fails to return their financial instruments (Notes) or uninvested funds.
Claims under investor compensation schemes typically arise when a service provider isn’t able to fulfill its obligations to investors. For example, if Mintos were involved in administrative malpractice or went out of business, and an investor’s Notes were lost, or they couldn’t withdraw their uninvested funds, they could claim compensation.
Under the investor compensation scheme on Mintos, investors can claim up to 90% of their net loss, up to a maximum of €20 000.
Investor compensation schemes are established according to Directive 97/9/EC and apply to all authorized investment firms and banks in the respective EU country. Mintos is regulated by the FCMC in Latvia and is a member of the Latvian investor compensation scheme. And all retail investors are protected regardless of their country of residence.
The investor compensation scheme, however, does not protect against investment risks such as poor performance of underlying loans, borrower default, or lending company default.
Why is an investor compensation scheme important?
Unregulated service providers can’t be a part of investor compensation schemes. So if something were to go wrong operationally, or the platform went out of business or was involved in fraud, investors could lose some or all of their investments and uninvested funds. Unfortunately, we’ve seen these situations in the past in the crowdlending sector.
Authorized investment firms, like Mintos, on the other hand, must be a part of an investor compensation scheme. So investors on our platform are protected in these scenarios.
Please note that on Mintos, the investor compensation scheme only applies to investments in the financial instruments Notes.
To learn more about the protection mechanisms of regulation, see investor protection on Mintos.