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Peer2Peer Finance News | January 18, 2019

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FCA identifies low P2P usage but fewer signs of consumer vulnerability

FCA identifies low P2P usage but fewer signs of consumer vulnerability
Marc Shoffman

JUST 1.4 per cent of the adult population are using peer-to-peer lending or crowdfunding but the product has among the proportionally lowest levels of financially vulnerable customers, figures from the Financial Conduct Authority (FCA) suggest.

The data is revealed in the City watchdog’s financial lives survey, a poll of almost 13,000 consumers about the products they hold and their experiences of them.

The research shows just 180 out of 12,865 adults, or 1.4 per cent, surveyed said they have used a crowdfunding or P2P product, which the FCA says works out as 700,000 adults when weighted against the UK population.

Of those who are using P2P, 74 per cent of respondents identified themselves as male and 25 per cent said they were female.

Read more: FCA chief outlines consumer credit concerns

The product was most popular among 35 to 44-year-olds, accounting for 26 per cent of investors, followed by 25 to 34-year-olds accounting for 17 per cent. The younger age bracket of 18 to 24, as well as the 65 to 74 cohort, accounted for just 10 per cent each.

The research also looked into how financially vulnerable customers were when using the products based on their financial resilience and capability – a reflection of their understanding of finance and ability to cope with lost income – as well as those who have suffered a life event that could hit their savings such as redundancy or divorce.

The FCA found 38 per cent showed signs of vulnerability, the lowest in the investment space, with investors holding structured deposits and insurance bonds shown to be most commonly at risk at 55 per cent and 51 per cent respectively.

Read more: RateSetter gains FCA authorisation

The proportion of vulnerable P2P customers is far below the average across all financial products such bank accounts, insurance, investment and pensions, which was 50 per cent of UK adults.

“The findings give us a wealth of information which will be used to increase our knowledge and understanding of the issues affecting consumers and how to best protect them,” Andrew Bailey (pictured), chief executive of the FCA, said.

“The data gathered will be invaluable in helping the FCA prioritise our work.

“We also hope that the research will provide valuable insight for other organisations focusing on consumers and finance.”

Read more: City watchdog clamps down on consumer credit pay incentives