In an unexpected turn of events, Chocolate Finance has temporarily suspended instant fund withdrawals due to soaring demand from customers. Initially announced on 10 March 2024, the financial services platform has since adjusted its waiting period.
Withdrawal Timeline Revised
After responding to customer concerns, Chocolate Finance revealed on 11 March 2024 that funds would now be available in three to six working days, rather than the previously stated ten. This shift reflects standard practices in the industry, inspired by the typical withdrawal cycle of most asset managers.
- Standard Wait Times: Withdrawals now take between three to six working days.
- Original Limit: Instant withdrawals were limited to S$20,000 per day.
- Transaction Limit: A temporary limit of S$250 per transaction on debit card spending has been implemented.
What Sparked the Changes?
The founder, Walter de Oude, explained that the issues stemmed from customers ‘gaming’ the miles rewards system, prompting an urgent need to adjust the liquidity programme. Due to a spike in withdrawal requests, the platform paused instant withdrawals to stabilise its liquidity.
Financial Insight
Chocolate Finance has been a buzzword in financial circles since its launch with attractive cash returns—offering 3.3 per cent per annum on the first S$20,000 deposited and 3 per cent on the next S$30,000. However, it’s essential to note that funds held with Chocolate Finance are not covered by the Singapore Deposit Insurance Corporation, as it operates under a capital markets services licence regulated by the Monetary Authority of Singapore (MAS).
The platform holds customer funds separately with custodians like HSBC, ensuring a level of safety amidst these changes.
Customer Impact
Since the withdrawal suspension, customers have expressed concern, prompted by a sudden shift in policies, especially regarding the removal of support for AXS payments. Financial blogger Dawn Cher and personal finance influencer Seth Wee played a key role in raising these issues, which have circulated widely on social media.
According to the MAS, they are closely monitoring Chocolate Finance’s navigation of this scenario and have instructed the platform to manage fund returns to customers orderly while maintaining transparent communication.
As the customers wait for their funds to be processed, many are left to ponder the balance between attractive returns and the underlying risks associated with newer financial services.