What You Need To Know About Crowdfunding And P2P Lending

What You Need To Know About Crowdfunding And P2P Lending
Underwater by Julian Cohen Why?

Crowdfunding And Peer-To-Peer For SIPP And SSAS

This article is part of a series. To view all the articles in the series, click the button below.

Crowdfunding And Peer-To-Peer For SIPP And SSAS

As Funding Circle’s share price plummeted 24 per cent on its first day of trading on the London Stock Exchange, it’s well worth reading this informative guide on Crowdfunding and P2P lending.

Savers’ Interest Rates Remain Stubbornly Low, So It’s No Surprise People Are Turning To Crowdfunding And P2P Lending, But Are They Fully Aware Of The Risks?

The Current State Of Crowdfunding And P2P Lending

From a marketing perspective, Crowdfunding and P2P lending platforms have done a great job, attracting more than £10 billion onto their platforms. 

Generally speaking, they pitch themselves as a comfortable place for your money, sitting somewhere between the low rates earned on deposit based savings and the volatility of stockmarket investments.

It appears, however, this isn’t always correct.

The Regulator Is Worried About Crowdfunding And P2P Lending

Concerned that consumers may not always be fully aware of all of the risks involved in Crowdfunding and P2P lending, in July 2018, the Financial Conduct Authority published a 156 page report looking into Crowdfunding And P2P Lending platforms.

The five key conclusions from the report are as follows:

1. The Crowdfunding and P2P lending area is very complex, which could be bad for investors.

2. Whatever systems and controls are in place, Crowdfunding and P2P lending will usually be classified as ‘high risk’.

3. Some Crowdfunding and P2P lending platforms are failing to communicate the risks properly.

4. Investors aren’t always getting the return for the risk they’re taking, and platforms offering a targeted return don’t always match the risk at the point of investment.

5. Some Crowdfunding and P2P lending platforms are considering residential mortgage lending, which might mean nobody has responsibility for the regulated mortgage lending activity.

Here's a link to the Crowdfunding And P2P Lending report.

To help consumers fully understand the risks associated with Crowdfunding and P2P lending, the regulator has proposed a number of changes to tighten up the rules.  The consultation period closes at the end of October 2018. 

Needless to say, some Crowdfunding and P2P lending platforms aren’t happy about the restrictions that might be imposed. 

One such proposal is to limit Crowdfunding and P2P lending to affluent investors only, as they are better placed to cope with financial losses. 

Ahead of the regulator's report, it’s well worth reading an informative guide on Crowdfunding and P2P lending.

Guide To Crowdfunding And P2P Lending

It’s been written for advisers by FTAdviser, helping them to focus on the key areas of Crowdfunding and P2P lending. 

It has contributions from a wide range of specialists and it’s arranged in four sections:

1. Why crowdfunding may not be for everyone.

2. How do the different models vary?

3. Why the FCA is concerned about P2P finance.

4. How to find the right platform.

Here’s a link to the Crowdfunding And P2P Lending guide.

Crowdfunding And P2P Lending In A SIPP Or SSAS

For information on investing your SIPP or SSAS money in this area, please visit our page on Crowdfunding And P2P Lending.

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