One debate, which quickly caused a divide between the bridging lender and peer-to-peer (P2P) platform panellists, centred on the proficiency of P2P loan credit assessments.
Andrew Bloom, Managing Director of bridging lender Masthaven Finance, boldly stated that there are inevitably going to be some P2P “horror stories” making the news in the future.
“I reckon that there is going to be a dampening of investors’ enthusiasm for it when they see a very mixed bunch of credit assessors working for the P2P lenders,” Andrew claimed.
Andrew argued that traditionally-funded bridging companies had “skin in the game” if something went wrong.
“P2P lenders - are they just brokers? They are just collecting money from an investor and then lending it out to a borrower.
“Do they have skin in the game? Is it their money? Is it their £20m start-up capital for a bank which is lending money?”
Andrew contended that P2P lenders were just matching investors to applicants with a credit assessment process in between.
“How good is that credit assessment? Well some of them will be very good, but too many of them, I think, are going to be quite poor,” Andrew said.
Panellists at the AOBP Forum 2016
Gary Mealing, Head of Property Lending at P2P platform FundingKnight, fought back, stating that P2P finance took “a great deal of care and attention”.
“…I think we all make sure we do [a] proper assessment of deals before we present those to our crowd of investors,” Gary said.
Gary explained that FundingKnight rejected 90% of proposals that came across its desk over the three business areas it traded in.
“I have been lending money for 30 years. I have got a really good understanding of what works and what doesn’t work,” Gary added.
“I suspect most of us have come from a background where we have been lending money in other businesses in other industries, and so bring that skillset into [our current businesses].”
Yesterday, the Financial Services Compensation Scheme announced that it may be able to compensate eligible investors of P2P finance up to £50,000 regarding unsuitable advice.
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