This morning, a writer at the Times published an article claiming that we're lending money to customers to buy shares in a supposed “overdraft offer” as part of our recently announced crowdfunding round. The writer has chosen to paint a particular picture and taken comments from users on our forum out of context to support a negative piece about our approach to this raise.
We disagree with the premise of this newspaper article. The factual errors in the journalist’s description of our previous crowdfunding rounds, together with the one-sided front page featuring a total lack of comment from Monzo makes this a frustrating read.
I want to set the record straight.
We don't encourage our customers to borrow money, from Monzo or anyone else, to buy shares. The article seems to stem from the fact we offer overdrafts to our customers and aren't withdrawing that facility while fundraising is live.
Crowdfunding is a highly regulated activity and we take that very seriously. To get to this stage, we've worked for months with our internal lawyers, external legal team, and the regulators. We’ve published an investment prospectus, reviewed and approved by the UK Listing Authority (UKLA), which contains all the details customers might want in order to make an investment decision. This prospectus is available to read now from monzo.com/invest for potential investors in advance of the raise next week.
Before customers can invest in our round next week, they'll see the prospectus document and must take a regulated suitability test to make sure they understand the investment and the risks that come with it. In particular, we’ve made it clear that investments like this are risky and illiquid, meaning that anyone who invests will probably need to hold their shares for at least a few years.
I’m really proud we’re able to offer our customers the ability to invest in Monzo alongside some of the world’s top professional investors, and on the same fundamental terms. Although our professional investors were very keen to cover the full amount, we wanted to give our customers an opportunity to share in any of our future success too.
It's also true that Monzo offers an overdraft facility to many of our customers. We only offer these overdrafts if they’ve met strict eligibility criteria that checks if they have a good credit history and can afford the overdraft. The Monzo overdraft is a fair, transparent way for our customers to borrow to meet their short-term spending needs. In particular, there are no hidden fees or bounced-payment charges that often catch people out.
We don’t encourage anyone to borrow money to make a long-term equity investment. And we aren’t encouraging anyone to use their overdraft to invest in Monzo as part of this crowdfunding round. But we also don’t believe it’s our place to judge or restrict how people spend their money (within the limits of the law). Suggesting that we disable overdrafts during crowdfunding seems deeply unfair to customers who expect or need to access their overdraft in that time.
When our crowdfunding round opens next week, our customers can choose to invest in Monzo. And, as is the case with all their purchases, they can use their Monzo overdraft to do this, as well as the overdraft of any other bank accounts they have. But again, we wouldn’t encourage anyone to do so.
Transparency is key to the way we run Monzo and this will never change. I’m excited for our upcoming crowdfunding round next week and would love to hear your thoughts and comments on our open community forum.