THE HEAD of the trade body for independent financial advisers (IFAs) has said that its members will be less cautious about recommending peer-to-peer finance investments to their clients if the industry can survive a downturn.
Chris Hannant, director-general of the Association of Professional Financial Advisers (APFA), told Peer-to-Peer Finance News that the organisation’s members have “a healthy level of scepticism about something new” and would wait to see how the P2P industry develops.
“The markets haven’t done too badly this year, but we’re facing uncertainty,” he said. “People may start looking for new things if the equity markets start suffering.
“A downturn would be the real test for P2P. If they can hold on to their lenders’ money and prove themselves when other asset classes are struggling, that could make the difference for IFAs’ perception of the industry.”
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Financial advisers have traditionally been rather cool towards P2P, which the industry argues is down to a lack of education around the products.
Hannant eschewed this suggestion. “I think that’s slightly wishful thinking of the P2P industry,” he said. “It’s really just a question of time. IFAs want to see a proven track record.”
He added that recent scandals surrounding unregulated Self-Invested Personal Pensions (SIPPs) have made IFAs more cautious in general and has encouraged them to stick to tried-and-tested products.
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“Financial innovation are two words that have cost the finance industry a lot of money over the years in compensation and brought the banking system down,” he said. “It’s fair to say that IFAs are conservative with a small c – they have to be careful with people’s money.”