A data provider has launched a service designed to help financial advisers compare opportunities in the peer-to-peer lending sector.
The new service, offered by Ocra, allows users to benchmark peer-to-peer investments in a way they would traditional asset classes, and also means advisers can perform due diligence on investments.
Iain Niblock, chief executive of Orca, said the new service – which covers 90 per cent of the UK's professional peer-to-peer market – responds to a gap in the industry.
“Although P2P investments offer stable, predictable risk-adjusted returns and great diversification for investors, there has been virtually no uptake since financial advisers were permitted to suggest their clients consider peer-to-peer products last year.
“This is because the risks are often relatively misunderstood, and investors and financial advisers alike do not have the tools and information to feel confident about P2P investments.”
According to figures from Orca, the peer-to-peer market increased by 40 per cent last year, and the firm estimated that by 2020 around 2.7 million people will be investing in peer-to-peer.
Despite this, Mr Niblock said there is a substantial lack of comprehensive investment information on the P2P market, particularly compared to other asset classes.
The Orca platform will offer standardised P2P investment and market data on items such as interest rates, default rates, bad debt rates, platforms’ financial standing.
It will be free to advisers, investors and industry commentators until September 2017.
Blair Cann, certified financial planner at Hertfordshire-based M Thurlow & Co, said: “I’m sure many IFAs who deal with this sector will find the new service interesting and useful."
However, he said he was wary of the high risk of P2P investment, adding very few of his clients would have a risk profile suited to any significant investment in this area.
“This really is the key; if you have adventurous clients this is relevant to your operation.
“But the provision of this service is not in my opinion going to unduly lessen the essential nature of the P2P risk. As they say in Dragons Den, I’m out.”