Investments 

Peer to peer market to swell by a third: ThinCats

Peer to peer market to swell by a third: ThinCats

New research has revealed that 40 per cent of people would consider investing in peer to peer when the Innovation Isa launches next April.

A survey conducted by One Poll among 500 active investors by lending platform ThinCats found that the new Isa will expand the market by as much as a third, as investors seek to utilise the tax advantages available to them.

At present, peer to peer is the preserve of a select number of more experienced investors - 6.8 per cent of the sample - but a swell in investors is likely to lead to P2P loans far outstripping allocations to equities and fixed rate bonds.

For the majority of current investors - 55 per cent - attractive returns are the main draw of P2P lending. Many also liked that they could readily see where their investment goes - 51 per cent - and were driven by the desire to try this new asset class - also 51 per cent.

Perceived risks remain a key barrier for entry - 43 per cent - as do worries around the relatively early stage of the industry and the partly unproven track record - 26 per cent.

As the Innovation Isa opens up the industry these concerns will need to be addressed, ThinCats added.

Meanwhile, nearly a quarter - 23 per cent - of investors said their financial adviser has recommended P2P to them.

Kevin Caley, managing director of ThinCats, said that the industry is poised for expansion. “Early adopters are still very much core to our business, but the government’s changes will open up peer to peer to a whole new audience.

“It is the industry’s job to manage the current concerns and communicate the huge benefits and security available for peer to peer investment.”

Research earlier this week by Yorkshire Building Society found that one in seven Isa investors say they will definitely take advantage of the new rules enabling them to withdraw money and reinvest without affecting their tax-free allowance.

ruth.gillbe@ft.com