P2P platforms raise minimum investment thresholds

Peer-to-peer lending platforms are increasing their minimum investment thresholds in response to regulatory changes.

Three platforms have announced hikes to their minimum investments in recent weeks, stating that it has become more costly and difficult to onboard smaller investments.

P2P development lender Invest & Fund recently confirmed that it increased its minimum investment from £100 to £2,500 “some time ago”, and plans to focus on more affluent investors.

“We don’t really see deposit sizes below £2,500, so it made sense from a model perspective not to have to aggregate a volume of smaller deposits,” said Alan Fletcher, partnership director at Invest & Fund.

“We feel that there is a massive market in the middle affluent looking for competitive returns, and that’s what we successfully cater for.

“That being said, we don’t feel that our minimum deposit size is a significant barrier to entry for clients looking to invest.”

Meanwhile, P2P property lender JustUs recently increased its minimum from £100 to £10,000 citing tightening regulation which has increased the cost of onboarding new lenders.

Lee Birkett, chief executive of JustUs, told Peer2Peer Finance News at the time that “it’s not worth the onboarding and ongoing monitoring of each lender unless they’ve got £10,000 invested, it’s such a shame.”

And earlier this week, fellow property lender Brickowner raised its investment threshold from £500 to £1,000 due to “changes to the regulatory environment”.

In January, new regulations were introduced which require all P2P lenders to include a risk warning on their websites. P2P platforms already had to add appropriateness tests to their websites to ensure that all prospective retail investors were aware of the risk of capital loss.

Then in July, the new consumer duty will be introduced, which requires all financial services firms to show that they are placing consumer needs at the heart of their business model.

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