Lenders engaging brokers

92% of financial professionals not confident advising on P2P products

Peer-to-peer (P2P) finance is in the ascendancy, yet many brokers still appear to be in the dark about the range of products on offer from this new wave of lenders.

Last month, members of the Peer-to-Peer Finance Association exceeded £8bn of cumulative lending following a strong first quarter of 2017.

However, a recent poll conducted by Bridging & Commercial found that 92% of financial professional respondents do not feel confident advising their clients on P2P products at the time of writing.


“The results of the poll aren't necessarily surprising,” admitted Stephen Findlay, CEO of P2P investment manager BondMason, who cited a wide range of operators and an even broader range of lending opportunities.

“…P2P lending requires double the effort for an IFA who needs to conduct due diligence on both the individual platforms and then the loans provided by them.

“It’s time-consuming and quite often they don’t have the resources to do it.”

Stephen said he did not expect brokers to deal with most of the P2P lending market any time soon.

“Rather than the entire P2P lending [market] becoming accessible to the entire adviser community, we expect to see a handful of advisers … specialise across the P2P lending market, and a handful of platforms to seek to work closely with many advisers.”

Two-way street

Although some brokers may be deterred by the complexity and variety of P2P products on offer, others have suggested more could be done to bridge the knowledge gap.

“I don’t know why it is, but in all my years, I’ve only had one approach from a P2P lender,” explained Stephen Burns of specialist finance brokerage Adapt.

“So I’d say it’s up to them to educate the brokers, make them aware of their products and compete with traditional lenders alike.”

This sentiment was echoed by Liam Brooke, co-founder of P2P platform Lendy, which has recently invested heavily in boosting marketing and communications efforts to improve the understanding of the sector.

“It is the P2P companies themselves that need to take responsibility for improving the public’s understanding of their products.

“This can be achieved in a number of ways, including building more one-to-one relationships with brokers and reaching them through different media.”

Paul Marston, managing director for commercial finance at RateSetter, suggested P2P lenders could work with organisations such as the National Association of Commercial Finance Brokers in order to raise their profile among intermediaries.

“Of course, awareness is one thing, but familiarity – knowledge of our products, how they work and how they can help clients – is what we’re focusing on,” he added.

What are brokers missing?

Unlike traditional lenders, which may rely on bank facilities or private funds, P2P finance can be sourced from thousands of investors.

With this, Liam argued, comes access to funds in a flexible and cost-efficient way.

“…We can make offers in principle in hours, and drawdowns within weeks for bridging and development loans respectively, which means developers can come to us and get projects moving in no time.”

And with bank lending to property developers having fallen 7% year-on-year during 2016, according to Lendy, this speed could prove a deciding factor in where borrowers look to source their finance.

“It’s quite clear, therefore, that brokers and funders must take advantage of the dearth in funding from banks – as well as developers’ need for finance – by positioning themselves as enablers,” added Liam.

“The country needs more housing and there is sufficient demand for more commercial property, so this is a real chance for brokers.”

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