The Peer-to-Peer market is growing rapidly at a rate of 200% a year in the UK and is attracting audiences both far and wide. The ‘tech-based’ financiers are competing with the banks to offer rates of returns that high street institutions, simply cannot match.
The Peer-to-Peer market is set for continued growth in 2015, this evolution may be aided by the impending General Election as parties aim to get businesses on side. In regards to finance, the current Government has been vocal about its support for Government-backed loans. In the Chancellor’s Autumn Statement in December, Mr. Osborne extended the Funding for Lending Scheme for another year which will see support for businesses in the country. This was a great update and received well by SMEs, however it still does not encourage the banks to budge on their reluctance to lending. It is however, a positive sign for P2P lenders as more and more companies are looking for attractive alternative lenders.
On the other hand, some observers suggest that the major parties will be more interested in working out how to offer tax breaks to lenders than directly working with SMEs. This however, can be also utlilised by Peer-to-Peer lenders by the ISA inclusion. The consultation period that ran from the 17th October 2014 and closed on the 12th December 2014 aimed to conclude if ISA eligibility would be extended to include Peer-to-Peer loans in order to increase choice for savers about how they invest. The consultation also sought views on whether P2P loans should be subject to the same transfer requirements as existing ISA investments, and whether they are suitable assets to be held in Child Trust Funds and Junior ISAs. The industry is awaiting the feedback…
A further encouraging initiate that will boost the awareness of Peer-to-Peer lenders is the partnership of RBS, Assetz Capital and Funding Circle. The deal between the companies will see RBS referring their rejected loan applications to Assetz Capital and Funding Circle in a bid to ‘expand choice’ for customers with loan applications that do not meet the bank’s criteria.
Furthermore, with the held Bank of England Base Rate, savers are seeking alternative routes by which they can make their savings work for them. Positively however, it has been reported that the Base Rate will increase sooner than the downbeat predictions. This is nipping at the heal of savers that may want to hold out for a 100% secure saving option rather the risker P2P lending terms.
Wellesley & Co. have enjoyed moving into 2015 with the strength of the industry only getting greater and the knowledge of the audience expanding. New products are on the horizon to ensure savers make their money work for them.