Some peer-to-peer platforms do not allow the investor to choose which type of loans they fund. 

Instead, platforms allocate investors’ money across a variety of different loans. 

RateSetter is one such platform that spreads investor risk across the whole loan portfolio, which includes a diverse range of individual and business loans.

“It has been so effective that to date every investor has received the return they expected without losing a penny,” said John Battersby, director of communications and policy at RateSetter.

“The result is a simple and accessible investment process: investors can focus on deciding how much they’d like to invest, at what rate and for how long.”

Chris Hancock, CEO and founder of Crowd2Fund, on the other hand believes that peer-to-peer investors should choose what they invest in.

“Peer-to-peer platforms should always provide investors with choice as this is the principle of the peer-to-peer model. 

“If the investor isn’t choosing the loan, then it’s not peer-to-peer and more aligned to the old institutional model.

“Platforms should offer the required transparency to comply with the regulatory requirement to provide enough information for an investor to make a balanced investment decision.”

Jane Dumeresque, CEO of Folk2Folk, felt that peer-to-peer platforms had very different funding models and investors needed to take time to realise the different risks.

Folk2Folk offers its lenders the choice of geographical area and business sector, while also offering the opportunity to select an individual loan.

“…Peer-to-peer lending is not a savings product and as such investors need to be able to understand the relationship between risk and reward and that products carrying a higher return also carry a higher risk,” said Jane. 

“Investors can look to spread their investment over a large number of loans offered by non-selective platforms, where although they have less knowledge of the individual loan, the impact of a default would have a smaller affect because the loan forms a smaller part of their overall portfolio.

“I therefore believe that there is room in the market for both platforms offering lenders choice and those who operate on a more pooled approach.”

Landbay diversify funds across multiple loans to help further mitigate risk, which Gray Stern, co-founder and CCO, felt provided investors with hassle-free and direct access to one of the UK’s best performing asset classes.

“The beauty of the peer-to-peer market is that there are multiple models on offer, thus investors can choose a platform that suits their personal requirements around loan type, risk, term and returns. 

“At Landbay our experienced underwriting team are specialists in UK buy-to-let lending and are therefore well equipped to assess loan applications. 

“They have the time and knowledge to make decisions on which properties to lend against and which borrowers to lend to.”

Chris, however, warned that not providing all the information could cause regulatory issues. 

“This is not peer-to-peer, but a more traditional lending model, especially when institutions also deploy funds through a platform. 

“Platforms may not allow investors to choose as the type of the loan is not suitable for the general public as it may be a more complex type of lending.

“Many of the incumbent peer-to-peer platforms currently in operation are still not fully, or adequately, regulated to offer investors these investment products.”