In reference to Ken Davy’s column about peer-to-peer lending (FA, 21 April), I agree that lending to start-up businesses comes with risk. However, Mr Davy should note that peer-to-peer lending covers a wide range of underlying asset classes.
As well as lending to SMEs, there are companies that lend on, for example, first-charge prime mortgages. Members of Peer-to-Peer Finance Association (P2PFA), the industry body for the UKs leading P2Ps, provide lenders on platforms with total transparency on underlying loan details, helping ensure that informed decisions are made.
Of course capital is at risk and there is no Financial Services Compensation Scheme cover, but you need risk to make returns. What is important is that you need transparency and an understanding of the underlying asset class to assess risk. When you choose an Innovative Finance Isa, make sure you choose a platform that is committed to this transparency, and you understand the underlying asset class.
Julian Cork
Chief operating officer, Landbay
London
