Earlier this month, Philip Hammond, chancellor of the exchequer, launched a new matchmaking tool to refer loans rejected by nine of the UK’s biggest banks to alternative finance platforms.

However, Chirag Shah, CEO of Nucleus Commercial Finance, has now warned that this scheme could leave some P2P lenders inundated by time-wasting leads.

“The last thing we want is to get inundated with 100 queries,” Chirag explained, adding: “And many times those deals are not good deals, which is why they get turned down.”

“It’s not about what we get, it’s what we can actually deliver on.”

Chirag claimed that the service could force lenders to wade through many leads which do not match their criteria, possibly reducing both their response times and, therefore, the amount that they lend.

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As a result, he warned that some firms may have to better define their criteria in order to limit the flow of unappealing leads.

“I don’t think anyone’s necessarily going to opt out, but I think over a period of time everyone’s criteria will become stricter and stricter.

“…We all need to be better at defining that criteria to a subset which we can deliver on, instead of taking [the] scattergun approach that many lenders have right now.

“It’s not practical looking at it all [the possible leads], nobody looks at it all.”

Nevertheless, Chirag admitted that the service could still come good once these issues have been ironed out.

“It’s trial and error – all the parties are going to try to make it work, but it will take time to sort it out.

“By Christmas, hopefully we can sort out all these questions and come [the] new year we’re all seeing [the] benefits from it.

“Whether [it’s the] alternative lenders like us, or the borrowers for whom all this is being done.”