UK P2P lenders predicted to become more reliant on institutional funding

THE UK’S peer-to-peer lending market will become more reliant on institutional funding, an analyst claims.

Colin Jackson, financials analyst at brokerage Goodbody, said the closure of Landbay’s retail P2P loanbook calls into question the role of ordinary investors in the sector.

“Interestingly, Landbay emphasises that it is taking this decision from a position of strength, pointing to the strong asset quality on its buy-to-let book and the growth in its institutional offering, though the decision nonetheless adds to the debate on the role of retail investors in P2P,” Jackson said.

“While we believe the market will evolve to become more reliant on institutional funding, this is not to say that retail investors will not – or should not – continue to enjoy access to this alternative relatively high-yielding investment product.”

Jackson said the new Financial Conduct Authority regulations being introduced next week will mean there is still a role for “savvy retail investors.”

Landbay announced its exit from the retail P2P market this week.

The buy-to-let lender said it will now purely focus on securing institutional funding for buy-to-let mortgages and retail investors have had their loans purchased and money returned including all interest accrued to date.

Its chief executive John Goodall insisted this was not a sign of the death of traditional P2P and insisted it was a “strategic and commercial decision.”