“2014 to be huge year for P2P industry”
Stuart Law, the CEO of Assetz Capital, one of the fastest-growing P2P platforms in the world, with rates stable at around 11-12%, has declared 2014 to be the year the industry will reach maturity.
Pointing to a range of factors such as increased government investment in the sector, increasing regulation and continuing exasperation with low interest yields from cash accounts and the volatile state of stocks and shares, he believes serious investor have seen the P2P bandwagon gaining speed and are jumping aboard.
FCA Regulation
As of April this year, the new Financial Conduct Authority will be regulating peer-to-peer lending, a move that many feel will see the industry gain much-needed validity. The increased regulations to comply with, and additional costs involved, could well see many platforms either withdraw from the market or swallowed by larger operators. Whilst this should hopefully see the more professionally-run outfits thrive, Law warns that investors must ensure their chosen platform has sufficient plans in readiness to cope with any eventuality.
In his interview with Financial Reporter, Law went on to outline his prediction that the range of rates will begin to narrow this year. Default risks will become more transparent and have to be factored into loan rates, meaning lower rates will begin to rise. Meanwhile the increase in available investor capital due to P2P’s rising popularity will mean that higher loan rates will start to shrink.
Business Bank
One of Vince Cable’s initiatives, the government’s Business Bank, has to-date invested around £100 million in small and medium enterprises through P2P, and that could well increase by up to £300 million in 2014, estimates Law.
There is also the increasingly likely prospect of P2P inclusion into ISAs forthcoming, something which Law sounds reasonably confident about. He says he wouldn’t be surprised to see P2P featuring in up to 50% of investment portfolios within the next 5 years. Boom time indeed.
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