Consumers misunderstand peer-to-peer lending, shows survey

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Consumers misunderstand peer-to-peer lending, shows survey

A new consumer survey conducted by peer-to-peer lender Assetz Capital has revealed that over half (53%) of consumers do not know what peer-to-peer lending is, identifying it as “a loan to a friend or associate”.

Only 28% accurately identified peer-to-peer lending as a non-bank loan to a business or entrepreneur.

Peer-to-peer lending is set to increase five fold in the coming three years according to the latest forecasts from the Ernst and Young Item Club, as SMEs turn to alternative methods of funding.

The Assetz Capital survey also revealed that only one in five consumers (20%) have actually heard of peer-to-peer lending. Although awareness of this investment vehicle is increasing among higher net worth individuals earning an annual salary of more than £71,000, with 82% having come across peer-to-peer lending.

There is also a significant gender gap when it comes to basic awareness levels: 62% of men claim to have heard of peer-to-peer lending but only 17% of women. However, when quizzed on the meaning of peer-to-peer there was little difference in knowledge as 29% of men and 28% of women correctly identified the meaning of peer-to-peer lending.

Despite greater awareness among high net worth individuals the proportion who had actually invested in peer-to-peer lending stood at 7%, compared to 3% across all consumers questioned in the survey. ISAs appeared to be the investment of choice: 84% of those surveyed had invested in an ISA at some point and 49% identified this form of investment as “very safe”. However, stocks and shares were deemed to be more risky than peer-to-peer lending by 23% of respondents, compared to only 19% who considered peer-to-peer to be “very risky”.

Consumers are currently fearful of unregulated lending with 79% of individuals indicating that they were not prepared to invest in something that was unregulated only 2.1% proffered an unequivocal “yes” to considering an unregulated investment.

Stuart Law, Chief Executive of Assetz Capital, commented:

“Our survey shows that peer-to-peer lending is still in its relative infancy and unregulated lending is still viewed with caution in spite of the loss of confidence in banks. This will no longer be the case when the peer-to-peer sector comes under the regulation of the Financial Conduct Authority in April 2014.

“Peer-to-peer is increasingly popular among high net worth individuals, eager to invest in something that will support budding entrepreneurs and give an excellent, often short term, return. As the big banks have lost credibility their monopoly will continue to be eroded and more creative forms of lending will prevail and blossom.”

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There are a number of significant changes that have far reaching consequences and see the most radical change to insurance law for more than 100 years.

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The mortgage market got its skates on in June, playing catch-up after May's stumble in lending.

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The market is likely to become increasingly competitive in future months, as low inflation, low rates and rising wages will act as a catalyst for demand.

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The opening of the demand flood-gates is likely to drive house price inflation to new highs in the future unless more houses are built to bring balance to the market.

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magnus duke dadzie 22 Jul 2015

Well done to Chris and the team...Keep on tracking

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Graham
Graham 21 Jul 2015

Excellent products but 'Market leading service' - who on earth are they trying to kid? They have been the single worst mortgage company for service for years. If they can keep spouting such rubbish as

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Younger people looking to get a foot on the ladder are facing fierce competition and this, along with the lack of supply, is driving up prices at a faster rate when compared to larger properties.

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Melanie Prendivillle
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lotuscat
lotuscat 17 Jul 2015

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john howard 12 Jul 2015

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