A Sector Snapshot of UK P2P Lending

Peer-to-peer lending (P2P) was founded in the UK in 2005 and is the leading source of online alternative finance for UK SMEs and consumers. Peer-to-peer lending has grown exponentially over the last few years with cumulative lending in the UK reaching almost £3.7 billion by October 2015, having approximately doubled in each of the last few years. The UK is the largest market in Europe, accounting for 85% of the European lending market. The UK's success in P2P lending can be largely attributed to a positive regulatory environment and consumer attitudes that are wary of traditional banking.

P2P lending is gaining popularity because of lower operating costs, faster processing speed and better financial returns as compared to a traditional lending system.

P2P lending platforms include variations like loans to individuals, SME loans, guarantor loans, loans based on invoices, etc.

The main drivers for the growth of the P2P lending sector have been its ability to offer attractive rates to lenders and borrowers. Borrowing from peers is cheaper than credit cards.

The report highlights the market size of the UK P2P lending market, popular players in the market, latest market and consumer trends and government regulations for P2P Lending in the UK.

Zopa, RateSetter and Funding Circle are the major peer-to-peer lenders in the UK and there are smaller players like ThinCats, LendInvest, MarketInvest, Madiston and many more. These lending platforms act as the administrators, helping borrowers find those who can offer loans. By eliminating the need for banks to intervene in the process, the lenders can offer loans at lower rates.

The increasing penetration of the Internet into everyday life has allowed customers to get comfortable with entrusting large sums of money to an organization represented solely by a website. Consumers are getting aware and gaining confidence in the new lending system as the sector matures.

The industry created its own self-regulatory body, the Peer-to-Peer Finance Association (P2PFA), in 2011. In terms of support for the P2P sector, the British Business Bank and some local councils have put funds through several P2P platforms to support business lending. In the 2014 Budget, the UK Government set out the aim of including investing in P2P lending in the popular UK tax-free Individual Savings Account (ISA) scheme to give consumers more choice of investments.

As the P2P lending industry is still relatively new and growing, there are two key risks that could impact its growth and perception in the market. First, reputational risks and second, excessive regulation could stifle its ability to compete with traditional financial services. Part of the function of the P2PFA is to help the industry minimize these risks by providing a forum for developing best practice.

As P2P lending grows, it brings diversity and choice for consumers and SME finance. Traditional institutions such as banks dominate the market for retail savings products and business/consumer lending. P2P lenders can help to bring new competition and greater resilience to the economy.


- Overview of the P2P Lending Market in UK

– UK P2P Lending Market Size

– Key Industry Players in P2P Lending Market

- Market Trends in UK P2P Lending Market

- Consumer Trends in UK P2P Lending Market

- Regulations in UK P2P Lending Market