Government support for peer to peer lending

calypso_rhapsody

I was intrigued by the reports on the radio this morning that the govt is to put £100m in matched lending alongside peer to peer lending for small businesses.

Now i know there are supporters of peer to peer on here but i personally consider it rather dangerous for two reasons. Firstly the loans are effectively based on self certificated income statements from the borrower - there is very little scope for any due diligence and secondly because losses are not tax deductable.

Do others share my unease at the govt appearing to give this unregulated market support?

talexuser

Of course. It's a sop to divert attention from the failure of the banks to honour their lending commitments in exchange for being bailed out directly or by QE etc and just another way for taxpayers/savers to pick up the tab.

CLAPTON

yes some more government spin that amounts to nothing at all;

just done because the government has forced the banks to increase their capital ratios i.e. to reduce their lending

Sussex_Green_Man

Yes, I agree. What's £100M going to do? It will just drive down the interest rates for those who are currently lending in this way and make it less attractive. According to an article in Wired, The Funding Circle is going to bid for £30M of the money. If they get it, it's almost equivalent to the figure they are quoting for the total of 'Loans Funded', on their website.

If the government was really interested in promoting peer to peer lending (rather than just grabbing headlines) they should have set up a scheme to underwrite some of the potential losses that lenders will incur when borrowers default.