Guide to crowdfunding and P2P lending

As published in “Guide to crowdfunding and P2P Lending” from FT Adviser, 6 September 2018

  • To understand how Crowdfunding and P2P finance works
  • To learn about the risks of crowdfunding and P2P finance
  • To learn about doing due diligence on a platform


By Melanie Tringham

Melanie Tringham is deputy features editor of Financial Adviser and

Crowdfunding and peer-to-peer (P2P) lending have become the funding source du jour – not least with the news of Funding Circle’s expected initial public offering (IPO), valuing the firm at £1.5bn.

And P2P finance has become tantalising to the people who use it as well, both investors and borrowers.

This is not altogether surprising. Most platforms offer investors rates of interest on their investments of at least 4 per cent, which is much more than anyone is getting on their cash deposits.

But many advisers are wary of suggesting clients explore these platforms as a ‘safe’ place to invest their money: the risks are completely different to those associated with putting one’s money in the bank, and often more risky than putting it in a Stocks and Shares Isa.

The Financial Conduct Authority (FCA) is taking a close look at P2P platforms, concerned that consumers are not fully aware of the risks, and that they are not mindful of what they are getting into.

It is also worried that these platforms have not been through a full economic cycle, so have not been tested when the economy heads south.

Advisers whose clients ask for this type of investment need to remind their clients of the risks they are taking on, and despite the model sounding similar to a bank deposit, it is something different entirely.

This guide is worth an indicative 60 minutes of CPD.

The following contributors to this article are: Anna Bowes, director of; Kay Ingram, director of public policy at LEBC; Bruce Davis, managing director of Abundance Investment; Dr Mark Davis, associate professor, University of Leeds; Alan Sheehan, technical manager at in:review; John Battersby, head of communications at Ratesetter; HMRC; Cambridge Centre for Alternative Finance; Funding Circle; Damian Webb, restructuring partner and alternative finance specialist at RSM; Financial Conduct Authority; Sarah Walker, director with Financial Services deal advisory.

In this guide

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