84% of savers rule out peer-to-peer lending

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The vast majority (84%) of savers would not consider investing with a peer-to-peer lender (p2p), according to new research from uSwitch.

Of them, 59% blame their reluctance on the industry not being covered by the Financial Services Compensation Scheme.

Almost half (49%) put it down to being sceptical about using peer-to-peer lenders because they don't know enough about them.

Meanwhile, four in ten cited the industry not being regulated by the Financial Conduct Authority. And another 22% explained that they are weary about using a firm they haven't heard of.

With only 2% of savers currently using a p2p lending platform, and a quarter of them only expecting to earn £50 or less this year in interest from their cash Isa, Brits are missing out on interest rates that often beat those available from high street banks.
But even the regulation of the industry from April may not be enough to tempt savers into the peer-to-peer loan market, despite the attractive interest rates on offer.

The uSwitch research found that where savers were looking for alternative homes for their money, more than four in ten would use their current account while one in 10 thought a piggy bank would be the best place.

For more on peer-to-peer lending and other savings options, check out our Beat the Banks campaign

Jafar Hassan, personal finance expert at uSwitch.com, said: "To encourage more widespread adoption, peer-to-peer lenders need to convince consumers that their money is safe, and they can't simply rely on regulation to do this. The fact is that many consumers are still skeptical about lending money if they don't know where it's going; others simply don't want to use an online platform."

Giles Andrews, Zopa chief executive and co-founder, said: "Our 52,000 Zopa savers are huge advocates of peer-to-peer lending – with good reason. Zopa offers returns of 4.9% (compared to bank savings rates typically under 1%) and with the protection of our Safeguard fund no saver protected by our Safeguard fund has lost money with Zopa.

"Peer-to-peer lenders in the UK have now lent over £1 billion and with FCA regulation from April this year, peer-to-peer lending offers a more rewarding mainstream alternative to banks.

"We offer a refreshingly easy and different service to traditional financial services organisations and with Zopa savers can see exactly who they lend to – not something they get from a bank.  Our mission is to reach every saver and borrower in the UK to give them the better rates and service they deserve."

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People are losing out here I've used P2P lending for a few years now and have never had a problem, the risk is not that great but the returns are better than any bank, as the banks have abandoned savers I will not be in too much of a rush to return when rates do go up.

I have been using Funding Circle now for just over a year and in that time have made more money than I could ever get from a savings account. The site is easy to use and I feel that my money is just  as safe using some of the big banks.