Don't invest unless you're prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 minutes to learn more.

The Assetz Capital platform is no longer open to investment from individual investors. No new investments into peer-to-peer loans are possible and, as a result, no new funds should be deposited. The existing loan book relating to the Retail platform is now in run-off and this will, over time, deliver the return of capital to investors. Full information can be found here . Existing Retail lenders can still log in, view information regarding their account and loan holdings and operate their account in accordance with the information regarding the run-off provided on the link above. Please see this important message regarding the currency of the information on the pages on this website.

P2P lending: Expect plenty of excitement in 2016!

P2P lending: Expect plenty of excitement in 2016!

The good news is that 2016 will surely continue to build on last year's success and we at Assetz Capital confidently predict that this will be yet another memorable year. Here are eight exciting developments, landmarks and milestones we can anticipate over the coming 12 months:

1. The arrival of the tax-free IFISA

Surely the biggest (and most welcome) news for P2P platforms and their lenders is the launch of the Innovative Finance Individual Savings Account (IFISA) on 6 April 2016. From the 2016/17 tax year, P2P lenders can shelter their interest income from the taxman's grasp inside tax-free IFISAs.

In addition, HM Treasury is working on plans to allow P2P lenders to offset capital losses (from loan defaults and bad debts) against the interest income they earn. This could improve returns for investors that buy P2P loans outside of the IFISA tax wrapper.

Above all else, we at Assetz Capital see the IFISA as our industry's most-anticipated development in 2016. Indeed, this tax haven may be the catalyst that tips many financial advisers into recommending P2P lending to their clients for the very first time.

2. Another year of record-breaking lending

Last year was an outstanding year for P2P lending, with lending of £2.68 billion accounting for just over half (50.7%) of total lending of £5.29 billion since 2005. Although lending growth in 2016 may slow from last year's 73.6% increase, the industry remains in a strong growth phase.

For example, were UK P2P lending to grow by, say, only three-fifths (60%) in 2016, this would translate into total lending of £4.29 billion for 2016 -- yet another single-year record. With the launch of the IFISA in April, if lending were to double this year, then this would equate to new lending of £5.26 billion, which is more than was lent in the entire 11 years between 2005 and 2015.

3. The UK's first billion-pound P2P lender?

Last year, three P2P platforms -- Zopa (£532m), Funding Circle (£531m) and RateSetter (£518m) all arranged lending of over half a billion pounds. Were any of these 'Big Three' to double lending volumes this year, then the UK will see its first '£1 billion in a single year' P2P lender. With both consumer and business P2P lending surging, it's anyone's guess as to which of this trio will claim this prized crown.

4. The UK's first £100-million-pound month for a single lender

In 2015, the UK record for P2P lending by a single platform in one month was set by Funding Circle, which originated lending of £62.6 million in November. Given the market's robust growth, it's a nailed-on certainty that one or more of the Big Three will rack up lending exceeding £100 million in at least one month of 2016.

5. New platforms and closures

With both consumer and business P2P lending increasingly dominated by a few key players, it will be a lot harder for newcomers to break ground, even for those backed by institutional money.

Nevertheless, continuing the trend of recent years, expect to see new P2P platforms launch and others cease trading and quietly shut down. In 2015, no fewer than nine new platforms launched in the UK and, already, at least another nine are moving towards launching in 2016. Unfortunately, one new entrant (Fruitful) lasted a mere nine months by opening in January 2015, only to close in October.

October 2015 saw the shocking collapse of Swedish P2P platform TrustBuddy, amid accusations of management failure and fraudulent activity. The UK has yet to see a catastrophic failure on this scale and, thanks to tough regulations introduced in April 2014; similar outcomes look less likely – especially for established platforms such as Assetz Capital.

6. More institutional money and listed funds

As the P2P industry rapidly gains scale and size against a backdrop of ultra-low savings rates and poor investment returns, expect a tsunami of institutional capital to flow into P2P lending. This wave of cash won't come only from banks, pension funds and hedge funds, but also from governments and possibly sovereign wealth funds.

Then again, with strong demand expected from retail lenders and London-listed P2P funds, as well as institutions, this wave of cash could drive down P2P lenders' rates across the board, leading to reduced returns for all lenders. That said, it remains to be seen whether this 'wall of money' will be big enough to drive rates down as demand for P2P loans increases from borrowers.

7. Higher lender rates?

In a fundamental change in policy, the Federal Reserve ended its Zero Interest Rate Policy (ZIRP) by raising the Federal funds rate in December by 0.25% to 0.25-0.50% a year, in the first increase since June 2006. The US central bank warned investors to expect at least four more rate rises in 2016, although markets are currently pricing in only two of these hikes.

Here in the UK, Mark Carney, the Governor of the Bank of England, is warning investors and borrowers that the Bank's base rate is likely to rise this year, after being stuck at 0.5% a year since March 2009. If and when the Bank does begin raising its base rate, lending rates are likely to follow suit, which could translate into higher returns for patient P2P lenders.

8. The UK's first P2P IPO?

Though a number of P2P-focused investment funds have listed in London, no P2P platform has yet come to market in the UK. Hence, investors keenly await Britain's first proper P2P IPO (Initial Public Offering, when a company offers its shares to the public for the first time).

Looking ahead to the next 12 months, Stuart Law, co-founder and CEO of Assetz Capital, is eager, excited and enthusiastic. Stuart says,

"At Assetz Capital, we confidently predict yet another record-breaking year for UK P2P lending. As the market grows in size and gathers pace, we see more and more individual investors and financial advisers turning to P2P lending to boost the returns they get from cash deposits. The highlight of the year will come on 6 April, with the launch of the tax-free IFISA set to revolutionise our industry overnight!"

WEALTH WARNING: "As with most forms of investment, peer-to-peer lending carries a degree of risk to your capital; in this case, if borrowers were unable to repay their loans. At Assetz Capital, we seek to reduce this risk to our investors by taking asset security on every loan, with the added benefit of a discretionary Provision Fund for some of our investment accounts."

- January 19, 2016

Back to News Stories