MSE News: Peer-to-Peer lending to move into the mainstream in 2015 29 December 2014 at 10:11AM in Loans 10 replies 2.4K views

Former_MSE_Paloma

"Christine Farnish, chair of the Peer-to-Peer Finance Association, explains why 2015 will see P2P lending go mainstream..."

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Peer-to-Peer lending to move into the mainstream in 2015




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jamesd

In the view of the Peer-to-Peer Finance Association what should a P2P consumer lending platform do when it has issued incorrect annual statements to borrowers? Is it required to refund interest for the period covered by the incorrect statement, like other places?

VT82

I don't know much about P2P lending, but it seems a bit disingenuous to describe Stocks and Share's ISAs as 'high risk'. I'm sure there will be plenty of S&S ISA choices that are lower risk than P2P lending?

rtaylor1729

One of the issues I have found with P2P lending (which seems to be overlooked in most discussions), is that to actually get your money back out of the system, you will have to pay a removal fee (referred to as Rapid Return on Zopa). You can, of course, elect not to reinvest the money when capital/interest is paid, but then you don't get the advertised rate and you might as well stick it in a 5 year ISA as the rates aren't that far off when tying up for so long.

jamesd

You get the advertised rate for as long as the money is invested and when it is returned you can pay it into any other investment you want. If you want to sell early there can be a charge and you might not be able to sell loans that have defaulted or even those that have ever been late, depending on the rules of each specific place. Debt collection can mean that you're committed to a ten to fifteen year business relationship with a peer to peer platform even after you stop new lending.

TattyBear

jamesd wrote: »

Debt collection can mean that you're committed to a ten to fifteen year business relationship with a peer to peer platform even after you stop new lending.

Both Ratesetter and Zopa have well established bad debt contingency funds which are used to pay loans and interest to lenders when borrowers default. It's only if you wish to deal with the likes of Funding Circle who couldn't give a damn about lenders when borrowers default, that you have to start dealing with debt collection.

jamesd

There's much more to P2P than just those three, with security rather than protection funds the more common approach.

I do have bad debts at Zopa from the time before they changed their system. I expect I'll still be dealing with Zopa for at least another ten years, possibly longer given the amounts on some arrangements or IVAs.

TattyBear

jamesd wrote: »

There's much more to P2P than just those three, with security rather than protection funds the more common approach.

I do have bad debts at Zopa from the time before they changed their system. I expect I'll still be dealing with Zopa for at least another ten years, possibly longer given the amounts on some arrangements or IVAs.

Sounds like you lent out more than you could afford to lose.

jamesd

Why would you think having debts from P2P that will take a long time to collect implies having lent more than I could afford to lose? There's no connection between the two things. Bad debts are just an inevitable part of P2P lending when it's using one of the places that doesn't have a protection fund.

ACG

No chance.

They have no real presence other than online. Even then, if you want a loan, typically your banks/supermarkets and brands that people recognise are going to get first dibs on new customers.

I have used P2P loans for clients but I dont think they will go mainstream during 2015, maybe 2017-2018 once the brand(s) become more recognised and the concept more understood. But next year is too soon.

TattyBear

P2P ISAs won't happen in 2015. Osbourne will drag his feet due to interference from the major high street banks who don't want customers withdrawing en masse and going over to Ratesetter, Zopa or the like.