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.
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment
to be high risk.
What are the key risks?
You could lose the money you invest
Many peer-to-peer (P2P) loans are made to borrowers who can’t borrow money from
traditional lenders such as banks. These borrowers have a higher risk of not paying
Advertised rates of return aren’t guaranteed. If a borrower doesn’t pay you back as
agreed, you could earn less money than expected. A higher advertised rate of return
means a higher risk of losing your money.
These investments can be held in an Innovative Finance ISA (IFISA). An IFISA does
not reduce the risk of the investment or protect you from losses, so you can still
lose all your money. It only means that any potential gains from your investment
will be tax free.
You are unlikely to get your money back quickly
Some P2P loans last for several years. You should be prepared to wait for your money
to be returned even if the borrower repays on time.
Some platforms may give you the opportunity to sell your investment early through a
‘secondary market’, but there is no guarantee you will be able to find someone
willing to buy.
Even if your agreement is advertised as affording early access to your money, you
will only get your money early if someone else wants to buy your loan(s). If no one
wants to buy, it could take longer to get your money back.
Don’t put all your eggs in one basket
Putting all your money into a single business or type of investment for example, is
risky. Spreading your money across different investments makes you less dependent on
any one to do well.
If the platform fails, it may be impossible for you to collect money on your loan.
It could take years to get your money back, or you may not get it back at all. Even
if the platform has plans in place to prevent this, they may not work in a
You are unlikely to be protected if something goes wrong
The Financial Services Compensation Scheme (FSCS), in relation to claims against
failed regulated firms, does not cover investments in P2P loans. You may be able to
claim if you received regulated advice to invest in P2P, and the adviser has since
failed. Try the FSCS investment protection checker here
Protection from the Financial Ombudsman Service (FOS) does not cover poor investment
performance. If you have a complaint against an FCA-regulated platform, FOS may be
able to consider it. Learn more about FOS protection here
If you are interested in learning more about how to protect yourself, visit the FCA’s website
For further information about peer-to-peer lending (loan-based crowdfunding), visit the FCA’s
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