Advisers decline p2p lending schemes in UK

Research conducted by Yorkshire Building Society, a type of financial institution in the UK, has found that just 18% of surveyed financial advisers would invest or have already invested their own money into peer-to-peer lending schemes.

Among the findings of the research include concerns about low levels of understanding about risk linked to p2p, which is not covered by the UK’s Financial Services Compensation Scheme – a sort of insurance scheme that is meant to provide payments to consumers of financial goods and services. Not being covered by the FSCS means investors could face losses of both capital and interest as well as restrictions on withdrawing money, YBS noted.

Some 82% of the 101 advisers surveyed did not believe customers understand p2p lending rules.

So far, just 4% of financial advisers have invested in p2p. A further 14% said they would consider investing their own money.

The figures come a week after the UK government said it would introduce a third type of individual savings account, the Innovative Finance ISA, which would enable over £15,000 to be invested tax free in the p2p sector.

Nearly half (45%) of the advisers surveyed said they thought the p2p sector would grow as a result of it being placed in the ISA regime. Last year the p2p industry trebled in size to some £1.3bn in the UK, as compared to the overall £57bn placed in cash and stocks and shares ISAs.

Andy Caton, executive director at Yorkshire Building Society, said: “Investing in p2p can offer strong possible returns but people need to be fully aware of the possible risks and costs involved.”

“It is clear that many financial advisers have concerns about consumers’ understanding and are unwilling to invest their own money in p2p despite the potential returns. It is good that the government has decided to create a new and separate type of p2p ISA instead of linking it to the existing stocks and shares option, which will help to limit potential confusion among consumers.”


Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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