Most P2P investors will continue to profit through the crisis

The vast majority of peer-to-peer investors will continue to profit through the crisis, Neil Faulkner, founder and managing director of 4th Way, has claimed.

He said this was because of sensible underwriting standards, solid security, provision funds set aside to cover bad debts, and attractive interest rates.

Read more: P2P fights back as coronavirus chaos threatens UK economy

“We’ve never seen anything like this pandemic before, but, while global markets are crashing, the vast majority of P2P investors will continue to profit through the crisis,” Faulkner said.

“This is the time when the P2P lending industry will prove that direct money lending is a very solid investment, providing stable results compared to the stock market, shared more fairly between participants.

“The banks continued to make decent profits on their bread-and-butter personal, business and property lending, even through the height of the economic downturn from 2007-2009.

“The one P2P lending platform that was around at that time easily kept pace with them.”

The P2P ratings and research firm found that as the impact of Covid-19 on the entire globe became clear, a minority of investors felt uneasy, selling their loans held in P2P lending accounts and Innovative Finance ISAs.

Unlike the recent stock-market sell-off, those selling loans did not have to do so at hugely discounted prices.

4th Way highlighted RateSetter, which mostly does personal loans, as one of the affected platforms.

“The performance of RateSetter’s portfolio has been stable, as can be seen from our published statistics, and our expert credit risk and borrower services teams actively monitor and make adjustments every day,” 4th Way said.

“In the current climate, we will give support to our borrowers.

“Our provision fund is managed with a buffer to be a shock-absorber for external events and our focus remains on investor protection.”

Earlier in the month, RateSetter said it has maintained liquidity after withdrawals peaked on the platform in mid-March.

The platform said despite the Covid-19 pandemic, it has been planning for the busiest time of the year in terms of its IFISA.

4th Way also highlighted P2P development lending platform CrowdProperty, which it said continues to approve and fund new loans as normal.

Read more: Property market on lockdown but P2P lenders are busier than ever

“It appears likely that the pandemic will weigh on economic activity, at least in the short-term, and this has had bearing on global equities markets,” said Mike Bristow, chief executive of CrowdProperty, cited in the 4th Way announcement.

“Real estate, however, is neither the cause nor the centre of this problem like it was in 2008.

“Our project pipeline remains strong and we will continue to monitor all projects very closely with our expert eyes.

“In times of stock-market volatility, robust well-secured debt products are attractive to an even wider range of investors.”