P2P retail investors still have a future in peer-to-peer lending but certain products will be more suitable than others, industry experts have suggested.
But Mark Turner, managing director, regulatory consulting at business advisory Duff & Phelps, said there is still a place for retail investors in the P2P sector.
“It’s not surprising certain firms are pulling out [of the retail investment market],” he said. “Some products are less suitable for retail investors, like those that are inherently more complicated and risky. And some have a different liquidity profile, with money being locked in for longer.
“Products for retail investors need to be easy to understand and messaged clearly in terms of what they’re getting into and what the risks are.
“There’s a future for retail investors in P2P, but not every product will be suitable for them.
“As P2P lending has become a vehicle for investment of institutional funds, some firms will move away from the original P2P model, whereas some with products suitable for retail investors that still work, will stick to the original model.
“There are still retail investors who want to invest money in the sector.”
Mike Bristow, chief executive of CrowdProperty, said the platform has performed well during Covid-19, partly because of having diverse funding lines from both retail and institutional investors.
“Retail investors have still been happy to invest throughout the crisis on our platform,” he said.
“The better platforms will grow their institutional lending and not necessarily shut their retail side. Retail is core to our strategy.”