Peer to peer market poised to swell following new ISA launch, says ThinCats

RESEARCH from Tamworth-based peer to peer lender ThinCats suggests the market is likely to see significant growth.

Its findings show that 40% of investors would consider investing in peer to peer when the Innovation ISA launches next April.

The findings show that the new ISA will expand the market by as much as a third (33%) as investors seek to utilise the tax advantages available to them.

Currently, peer to peer is the preserve of a select number (6%) of more experienced investors. The swell in investors would lead to peer to peer loans far outstripping allocations to equites (28%) and fixed rate bonds (24%). 

When it comes to motivation, for the majority (55%) of current investors attractive returns are the main draw of peer to peer lending.

Many also liked that they could readily see where their investment goes (51%) and were driven by the desire to try out this new asset class (51%).

The perceived risks involved remain a key barrier for entry (43%), as do worries around the relative early stage of the industry and the partly unproven track record is a hesitation for a quarter (26%).

ThinCats says that as the Innovation ISA opens up the industry these concerns will need to be addressed.  

Interestingly, nearly a quarter (23%) of current investors say their independent financial adviser (IFA) has recommended peer to peer to them and the Government’s Innovation ISA will bring alternative finance further into the mainstream. 

Kevin Caley, managing director of ThinCats, said: “The findings of our research show that the industry is poised for expansion. Early adopters are still very much core to our business, but the Government’s changes will open up peer to peer to a whole new audience.

“It is the industry’s job to manage the current concerns and communicate the huge benefits and security available for peer to peer investment.”