P2P industry welcomes CCAF report amid due diligence concerns
PEER-TO-PEER platforms have heralded the latest update on the size and strength of the sector from the Cambridge Centre for Alternative Finance (CCAF).
The latest CCAF report showed the whole alternative investment market grew by 43.1 per cent to £4.5bn in 2016, with business, consumer and property P2P platforms proving most of the boost.
Debt-based securities P2P platforms saw the biggest proportional increase, albeit from a lower base, from £6.2m to £79m over the year, up around 1,200 per cent.
Bruce Davis, co-founder of renewables P2P bonds platform Abundance Investment said the report shows how important the sector is to the British economy.
“This report provides a very positive picture of a new and exciting sector maturing steadily and providing an increasingly significant source of capital to the powerhouse of UK economic growth – startups and small and medium size enterprises,” he said.
Anil Stocker, chief executive and co-founder of business loans and invoice finance platform MarketInvoice, said the platform has also benefited from the increased investment in the sector.
“This year we have already advanced £657m and are close to reaching £2bn in funding,” Stocker said.
“We have increased the range of invoice finance options and launched a new business loans solution by popular demand from our customers.
“Businesses find us quick and ease to use which has helped create advocates and grow interest. Our customer service stands out for high praise and this also helps to distinguish us from traditional lenders.”
Stocker predicted that the launch of Open Banking next year would boost awareness.
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But there were warnings about findings in the report that showed most investors rely on the P2P platform to do the due diligence on loans for them.
Sacha Bright, founder of Businessagent.com, which displays crowdfunding and business P2P investment opportunities from different platforms, said the sector should be providing more consistent information so investors can compare providers.
“There’s a lot of really positive news in this report, the sector is growing, it is entrenching its position as a key part of the funding infrastructure for UK SMEs, start-ups and innovative businesses,” Bright said.
“However, there are some strong indications of areas where the sector needs to improve too.
“The report highlights that the majority of investors, 60 per cent, rely on the due diligence of the platforms, with the report stating that platform-led-due-diligence is critical to investors.
“We know that whilst the platforms strive to deliver the best service that they can for their investors the due diligence undertaken varies significantly between platforms. With such a high level of trust in the platforms will the Financial Conduct Authority tighten the rules on this area and bringing more consistency to approaches?”