Peer to peer

No sign of decreasing P2P appetite, claims lender

There has been no sign of a decrease in demand for peer-to-peer finance, online platform RateSetter has told Bridging & Commercial.

The comments follow a recent freedom of information request by Bridging & Commercial, which found that over 3,500 firms had given up permission to advise on peer-to-peer agreements. 

Ceri Williams, head of investor operations at RateSetter, said that in its experience, it hadn’t seen any signs of a decrease in appetite from advisers.

“…We’ve seen steadily increasing demand from advisers, and the value of IFA-administered accounts on our platform has doubled over the last year. 

“Although there are clearly hurdles – for example, direct investments in peer-to-peer lending are not currently available through investment platforms commonly used by IFAs to buy products on their clients behalf – we see no signs of decreasing appetite.”

Robert Pettigrew, director at the Peer-to-Peer Finance Association, felt the continued growth and development of the sector in the UK underscored the view that the overriding narrative was one of success.

“As peer-to-peer lending continues to expand, and the base of investors and borrowers broadens, the importance of making sure that the level of awareness and understanding of the associated benefits and risks will acquire even greater relevance. 

“This is recognised and has been embraced by platforms which have adopted a number of different approaches to ensure that their investors understand unambiguously the implications of engaging with peer-to-peer lending as part of a mainstream financial services offering.”

However, Robert added that one element of how to improve the understanding and optimising the potential of peer-to-peer lending involved the engagement of the adviser community.

“The decline in the number of firms reported by Bridging & Commercial is unlikely to do much to enhance that potential; and the FCA will want to take account of how the balance should be struck between providing adequate regulatory protection without allowing obstructive messages to emanate which might undermine the opportunities presented by a fast-moving, competitive, dynamic marketplace which peer-to-peer lending represents.”

Jane Dumeresque, CEO at Folk2Folk, explained that the FCA process was extremely tough and was not too surprised that some had withdrawn. 

“It’s important that the market has quality platforms, not just quantity. 

“Consumer choice is important, but equally is having an industry made up of responsible providers, even if that is small for now. 

“By making the FCA process rigorous for firms, it helps foster a quality market environment for the long term to benefit consumers and businesses. 

“I believe there is strength in having market specialists as they will continue to thrive and grow.”

Iain Niblock, CEO and co-founder of Orca, felt that the majority of cancellations related to firms giving up their permissions more generally, as opposed to specifically because of peer-to-peer agreements. 

“From speaking to financial advisers we’ve found a difference in opinion. 

“Some advisers have a distaste for this asset class often formed from [a] lack of understanding. 

“Other advisers can envisage P2P forming part of their clients’ portfolio and are eager to deliver client value. 

“In a low-yield environment, they are keen to explore and better understand the risk-adjusted, non-correlated returns that P2P can offer.”

Meanwhile, Robert added: “Given the incremental progress on securing regulatory authorisation, and the relative torrent of investor interest in the emerging multitude of Innovative Finance Isa products – which peer-to-peer lending platforms are bringing to market – I would not be surprised were the level of adviser attention in peer-to-peer lending to acquire enhanced relevance and involvement in the future – if only as a result of a growing investor base who will have that expectation. 

“Mechanisms which enhance the capacity of advisers to engage effectively with peer-to-peer lending products are to be welcomed and encouraged; and a number of platforms have made individual progress in this respect.”

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