Is Peer to Peer lending the next disaster waiting to happen?
Such lending is not covered by the Financial Compensation Scheme which applies to bank savings to a max of £85,000.
Presumably,a lender lends initally to the organisation who then in turns lends to individual borrowers and so the contract is between organisation and lender.If the organisation employees either bankrupt or steal the funds lenders only rank as unsecured creditors?
Is an average 8% interest rate adequate compensation for taking such a risk.I would have expected 8% for secured lending.
Peer to Peer organisations have gone bust in the past.
Only the future will prove if this analogy is correct.