P2P backers stand their ground despite scandal

The two largest holders of P2P Global, Neil Woodford and Invesco Perpetual’s Mark Barnett, declined to comment.

Ewan Lovett-Turner, director of investment companies research at Numis, thought the Lending Club mis-selling was an “isolated incident”.

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“If P2P fell down [on due diligence] then I would be more concerned, but I believe the Lending Club issue feels like an isolated situation rather than a systemic issue that due diligence could have picked up.

“In some ways, it is positive that the board of Lending Club took action to remove its chief executive, showing that even high-profile founders need to play by the rules. [That said], it is another bit of negative sentiment for the P2P sector.”

Innes Urquhart, investment trust researcher at Winterflood Securities, said: “The listed closed-end funds investing in this area have a number of high-profile backers and have largely executed on the strategies outlined at the time of their launch.”

Peer-to-peer lending

Trusts operating in P2P lending have become more common in the past two years. The vehicles, such as P2P Global Investments, generate returns by investing in non-bank loans to individuals and small businesses. Platforms are the main method in matching those with lending capacity with borrowers, with the trusts investing in the loans and taking equity stakes in the platforms themselves.