Peer-to-Peer lending is a new way of giving customers above inflation returns on their cash. As from April this year the sector is now regulated by the FCA and our research demonstrates that many advisers will wish to consider the merits, or otherwise, of these products for their clients. Why? Because returns are far greater than deposit products on the market. For example, interest rates range from 2.0% on 30-day notice accounts to 5.5% on 5 year term accounts with RateSetter.
In addition to the headline return it is equally important to fully understand the risk and how this risk is managed by each peer-to-peer lending company. RateSetter has achieved a rating from FE and this paper gives you the full background to the rating and how you can use it. As the paper makes clear, this rating from FE does not assess the financial strength of RateSetter, rather it focuses on the degree of volatility offered to investors in this product.
There is no doubt that clients will be asking about this product area and this area is designed to try and help you understand more about this.
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Adviser Home recently ran a survey with UK advisers on the topic of peer-to-peer lending and here are the headlines:
· 52% would recommend peer-to-peer lending as an alternative to mainstream cash products
· 50% expect to be more involved in cash management over the next 12 months
· 63% expect their clients to show an interest in peer-to-peer lending now the sector is regulated by the FCA (from April this year)
There are clear benefits for your clients, not least is that fact that their cash can earn above-inflation returns. Peer-to-peer lending is likely to be an important part of every adviser’s toolbox in the future. As with any prospective investment advisers will of course need to be clear as to the overall risk profile and how it relates to other, similar investments.
Want to find out more?
RateSetter, one of the UK’s leading platforms, is now an Adviser Home strategic partner. You can learn more about RateSetter in this 60 second video.
You can also learn more by accessing this report - IFA’s attitudes towards peer-to-peer lending, an Adviser Home survey. View here>>
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