Senior figures in the peer-to-peer industry have criticised advisers for ignoring the sector, despite government initiatives, with some saying efforts to engage the advice community have proven pointless.
P2P lending moved toward the mainstream on 6 April 2016 with the launch of the government’s Innovative Finance Isa, allowing savers to loan money at interest to a vast array of unlisted companies.
But concerns about the level of due diligence required, and suitability for clients, have led many advisers to shun P2P investments, sparking frustration in the sector.
Colin Hodges, head of investor operations at RateSetter, said the firm had tried engaging with advisers, including at Personal Financial Society events where several hundred had been present.
“To be truthful, the time allocated to advisers has given us a very poor return,” he said, branding follow-ups “extremely limited” and “poor quality”.
“I don’t think we have had one adviser come to us to ask questions to help understand our product, so it’s all being led from our perspective,” Mr Hodge said.
Karl Harder, co-founder of Abundance - the first P2P platform to gain full permissions to offer the new Innovation Isa – said the firm’s two initiatives aimed at advisers “had not been very productive”.
However Mr Harder said he sympathised with advisers’ reluctance, saying they had been “buffeted” by regulatory changes, making it difficult to think about new products.
“The time allocated to advisers has given us a very poor return.” Colin HodgesJake Wombwell-Povey, managing director of P2P technology provider Goji, said many IFAs remain wary as most providers in the sector are still not been fully authorised by the regulator.
More than 90 per cent of P2P platforms were unable to offer the Innovative Finance Isa - which lets P2P investments sit inside a tax efficient wrapper - on the first day it launched due to a delay in the FCA’s permission process.
“It took 20 years for exchange traded funds to come to prominence. It’s not going to be something that’s happens overnight.
“It’s going to be a gradual education journey which the industry is going to have to submit to.”
William Watling, product marketing director at financial technology firm Altus, said advisers will be more comfortable with P2P when it more closely resembles what they are used to.
“With most of advisers’ investment business now placed via platforms, until the basic infrastructure is in place it is unlikely advisers will buy P2P investments,” he said.
Tony Catt, compliance officer at Anthony Catt Limited, said: “Advisers are paranoid about things that they do not understand.
“The due diligence burden is always going to be a block to anything new. Also, advisers need to be paid for their recommendations by the P2P providers.”
katherine.denham@ft.com
