Peer to Peer Returns Fall

UK peer-to-peer investors have seen their returns fall by nearly 2.5 percentage points in the last three years thanks to mounting losses, analysis shows.

In March, the average return on a portfolio of loans provided by the UK’s ‘big four’ of Funding Circle, MarketInvoice, RateSetter and Zopa was 4.1 per cent.

This is down from a high of 6.4 per cent in the second quarter of 2016, according to a new report into the UK P2P market by fintech website AltFi.

Peer-to-peer investing, which allows casual investors to invest in businesses or people in need of loans through a platform middleman, has become more mainstream in recent years but concerns have also been raised about the risks of the practice.

Those concerns have been amplified by the collapse of Lendy, which went bust in May and has left around 20,000 investors as much as £165million out of pocket. 

Last month the Financial Conduct Authority also announced new rules for the industry which come into force in December.