The recent £15m Lending Club scandal in the US saw the Peer-to-Peer Finance Association (P2PFA) forced to reassure investors about the industry, while there was also concern over provision funds when it was revealed that RateSetter had used its reserve fund to facilitate larger loans.

Meanwhile, perceptions weren’t improved by Lord Turner’s attack on the peer-to-peer industry, while the founder of Assetz Capital even admitted that a platform would get their model wrong.

Jonathan Sealey, CEO and Founder of Hope Capital, felt these incidents only added to the apprehension surrounding peer-to-peer lending.

“The reason people are worried about peer-to-peer is because it involves a lot of very unsophisticated investors, potentially investing money they cannot afford to lose into schemes where they are unaware of the risks.

“These investors are not covered by the Financial Compensation Scheme and while most peer-to-peer lenders say that they have some sort of reserve to pay back borrowers, if a project does not go to plan, there are few that guarantee to pay the money back and most reserves amount to less than 10% of the money invested in the platform at any one time.”

John Goodall, CEO and Co-Founder of Landbay, admitted that, as with any new product or innovation, there would be caution.

“…P2P platforms offer a broad range of investment products, ranging from lending on unsecured consumer finance to loans on secured, income -producing homes and so each investment should be judged on its particular risk/reward profile.”

John felt that education and transparency were key as it would allow consumers to understand the model and form their own opinions, based on their own financial needs.

“I think there remains a huge amount of education to be done on P2P lending itself.

“For example, P2P is often confused with the likes of equity crowdfunding, which offers investment opportunities with a completely different risk profile.

“P2P businesses and anyone representing them, from the media to comparison sites, need to make sure they are displaying the risks and rewards of each individual investment product in a transparent fashion.”

Paul Wertheim, Operations Director at Mint Bridging, said he had followed the rise of peer-to-peer with interest and felt it wasn’t all doom and gloom.

“As with all business, some cowboys do exist.

“And having spent some time with other principles of such lending platforms, they are trying to achieve great things ethically and responsibly.

“People are sheep and in the main do not like change and fear the unknown, I am not going to enter the Brexit debate here but ostensibly its being driven by fear of the unknown which is being fuelled by the in or out arguments.”

A spokesperson for RateSetter, meanwhile, didn’t accept the premise that peer-to-peer had a problem of negative perceptions, but said understandably that it was important to build trust.

“There are no shortcuts to this: it must be earned by building a strong track record and consistently delivering for customers.

“There are many things that we are already doing which help things along: for example, we were among those that sought regulation of our industry, which is now in place; we have set new standards in transparency and openness, for example publishing our full loan book and other platform data; and we have invested in building a strong team of experienced risk professionals and an award-winning customer services department.”

Jonathan, however, did conclude that not all peer-to-peer lenders were risky.

“The bigger bridging lenders who have moved into this space know what they are doing; they know how to assess whether a building is worth lending on because they have been doing it for years.”

Meanwhile, Paul concluded: “I can guarantee that some of those in the P2P arena will fall, and by the process of elimination those left will be stronger and healthier.

“But P2P is going nowhere and just like Bridging is now being considered more mainstream lending, P2P is here to stay.”