P2P industry berates advisers’ lack of interest in sector

P2P industry berates advisers’ lack of interest in sector

Senior figures in the peer-to-peer (P2P) 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 towards the mainstream on 6 April 2016 with the launch of the Government’s Innovative Finance Isa, allowing savers to lend 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.

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Advisers also have concerns the P2P sector is not covered by the Financial Services Compensation Scheme, although it is regulated by the FCA.

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.

He said: “To be truthful, the time allocated to advisers has given us a very poor return.”

Karl Harder, cofounder 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.

Mr Harder said he sympathised with advisers’ reluctance, saying they had been “buffeted” by regulatory changes, making it difficult to think about new products.

Jake Wombwell-Povey, managing director of P2P technology provider Goji, said many IFAs remained wary as most providers in the sector were still not fully authorised by the regulator.

He added: “It took 20 years for exchange traded funds to come to prominence. It’s not going to be something that happens overnight.”