The challenge for advisers is they must do a new type of due diligence on P2P providers, and make sure they are asking the right questions.
Mr Marsland recommended seeing if providers put their money where their mouths are and pointed out Octopus also co-invests on every loan.
Questions should also be asked about liquidity for people wanting to access their investments, Mr Marsland added.
Neil Faulkner, managing director of 4thWay, reminded more than 40 advisers gathered at the masterclass of the importance of people having the right kind of background to run a P2P platform.
He said advisers should also look at what kind of asset the client is looking for; whether it was an appreciating asset or income producing, “or is it depreciating or difficult to value?”
For example, the adviser should weigh up whether the asset being lent on was property, which is easy to value, or jewellery, which is not so easy to value.
Mr Faulkner said: “Thinking of asset-backed lending: what kind of lending is it? There’s different asset-backed lending – and how much does the platform care about the borrower?”
Another point Mr Faulkner said advisers should consider is that P2P lending is data-based, so a borrower can get loan-to-value ratios on some assets and a reasonable assessment of the risk attached to their investment.
Mr Faulkner added advisers may also want to look at how long a P2P provider has been around for; how many loans are going late; and how many loans are going bad?
But given the current turbulence of markets, Mr Webb also noted that historical performance of a P2P provider should not be relied on by advisers when trying to pick a suitable investment.
He issued a warning about the viability of some P2P platforms he had encountered.
Mr Webb said: “My personal view is that we’re in the [down] cycle now. We’ve been in very benign credit conditions for the past five or six years and a lot of these platforms haven’t been tested.
“The yield in premises in Birmingham five or six years ago was 8 or 9 per cent. That’s compressed now to 4 or 5 per cent.
“I don’t believe that stacks up. As the cycle kicks in, people will become unstuck. You have to understand what you’re lending against.”
He added that as an insolvency practitioner, he had witnessed a 50 per cent discount on a series of pubs compared with their valuation 18 months ago.
