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Predictions for 2016

  1. Peer to peer lending will arrange £4billion of new loans
  2. There will be a slowdown in new companies entering the sector
  3. Demand for the Innovative ISA will depress lending rates
  4. There will be several changes in ownership of providers
  5. There will be calls for tighter regulation

Other predictions

Review of 2015

The announcement of the Innovative Finance ISA in 2016 was perhaps the highlight of 2015.  Zopa and Funding Circle both broke the £1billion barrier in terms of arranged loans since inception.

Review of 2014

In 2013 we predicted £¼billion of new loans, while £½billion of loans were actually arranged.  In 2014 over £1.6billion of new loans were arranged, easily beating our prediction of £1billion.  Fifteen new companies entered the peer-to-peer sector, but five existing companies exited or suspended their peer-to-peer offerings, most likely due to the introduction of regulation of the sector by the FCA.  The most well known brand to exit for the market was YES-secure (Encash) which bought out all existing lenders.  The student lender Gradurates had its loan book purchased by RateSetter.

Companies such as LendInvest and Wellesley & Co. have seen huge growth and are now rivalling the big three of Zopa, Funding Circle and RateSetter.

Review of 2013

There were £½billion of new peer-to-peer loans arranged in 2013 as the sector continued to grow at an increasing rate.  Seventeen new companies entered the P2P space, while two international companies opened up lending to UK lenders.  Interest rates continued to fall, but bad debts did not show any significant increase, but this may be skewed by the growth rate within the sector.

Review of 2012

It was announced in 2012 that the government would seek to regulate peer-to-peer lending in 2014, and would also lend £30million through Funding Circle and Zopa in 2013 to support small businesses, which the banks are failing.  Several milestones were broken with peer-to-peer lending achieving a 90% year-on-year growth.  While there were six new entrants to the peer-to-peer market there were two casualties, with several other companies experiencing difficulties or delay launching.

RateSetter introduces lending bonds that operate similar to savings bonds and several companies offered loans on car finance.  Zopa reintroduced the 24 and 48 month markets, then removed the C and Y credit grades

Review of 2011

The year 2011 saw some major progress with peer-to-peer lending with the massive growth of Funding Circle, RateSetter, and Zopa.  This contributed to the breaking of the £100million barrier for current peer-loans.  The three major players launched the P2P Finance Association, which is a trade body to ensure minimum high standards for consumers.  It also saw the first casualty of the peer-to-peer lending industry in the UK with Quakle closing.  Zopa withdrew their listings to focus primarily on their market model.

Outside of the peer-to-peer lending arena, a new concept of crowd funding was launched and has already proved popular, with one potential P2P company civilisedmoney raising £100k.

Review of 2010

Prior to 2010 peer-to-peer was synonymous with Zopa.  However 2010 changed this with an explosion of new entrants into the P2P arena, including YES-secure, Funding Circle, Quakle and RateSetter.  YES-secure is similar to Zopa listings, with smaller fees and higher loan rates, Funding Circle brought to listings to businesses, Quakle extended P2P into a social model and RateSetter introduced the provision fund, effectively offering some protection to lenders from defaults, without the tax implications.