P2P Architecture

Published on September 16th, 2020 | by Jenny


Financial Conduct Authority urged to ban P2P easy access accounts

When it comes to the world of peer to peer lending the rules and regulations surrounding it are constantly changing, as is the advice offered by experts in the industry. 


Lack of clarity over the ‘easy access’ nature of P2P accounts 


New products come out routinely in the market, and as the industry has looked to market better to retail investors, there has been an increase in the number of financial products that offer an ‘easy access’ element. Whilst these have proved popular with new investors they have come under fire as they appear to mislead the public on the ‘liquidity of the investment’. 


The FCA (Financial Conduct Authority) has been urged to ban easy access to peer to peer lending accounts as they could lead to individuals investing money that they do not have. Many providers allow investors to withdraw money from their accounts at short notice, however, this is often reliant on a secondary market from which the investments have to be sold. 


The industry has been urged to be more transparent about its offerings. Clear messaging is needed to illustrate that peer to peer investments only reach maturity once the loan has, and this makes them longer-term investments which need to be viewed with an in some cases 5 plus years life cycle. 


The lines have for some been blurred lines between savings accounts and peer to peer lending accounts. According to industry consultant Theresa Burton, there has been a lack of clear advertising and differentiation between peer to peer lending and savings accounts. 


Make sure you understand the risks when putting money into peer to peer lending 


Whilst peer to peer lending is trying to become more accessible and transparent in what they offer there are clearly still some areas of the industry that need to be approached with caution. When investing in peer to peer lending make sure you have a good understanding of the risks you are taking. This will help you make the correct decision for your investment portfolio and your future. 

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