A business operating in the UK's peer-to-peer space says it is widening the appeal of this asset class.

The world of peer-to-peer lending, an area that has grown as conventional bank lending slowed after the 2008 financial crash, is becoming more mainstream.

A firm operating in this space, UK-based {tag|Goji|Goji, is a direct lending investment manager and platform, which now has 25 platform clients, with recent arrivals including Earthworm, Dot Fund, Route Finance, Growth Capital Ventures and Bird Box Bonds. Older firms in the Goji stable include Downing, Landbay and Assetz Capital. Goji, which is regulated by the Financial Conduct Authority, was set up in 2015.

Goji is changing the direct lending story by giving investors the ability to put money into a basket of P2P loans. Investors are freed from the chore of due diligence on an individual P2P provider and its loans.

Instead, Goji’s managers do this work. As well as creating a platform for individual direct loan providers, Goji has built a fund of such investments held inside Innovative Finance Individual Savings Accounts. While other firms such as Octopus Investments have built IFISAs, Goji says its fund takes the game up another level by spreading investments across a range of individual P2P providers. 

“The IFISA now sits alongside cash, stocks and shares and lifetime ISAs to give investors more diversity and choice over what to do with their ISA investments. Bearing in mind how low cash deposit rates are, and that inflation is starting to come back, the IFISA is a much-needed tool to help investors generate real returns from their savings,” Jake Wombwell-Povey, CEO and Founder of Goji, said. WealthBriefing recently met the firm during one of its presentations to financial advisors in central London.

The firm says that investors are hungry for yields when they are so low on conventional cash ISAs and similar products. 

“It is not just our own data that demonstrates this change in attitude away from cash ISAs. According to HMRC, the number of new IFISA accounts from 2017/2018 represents 620 per cent growth from the previous year, and that number will be growing every year. Such rapid growth is surely a sign that the IFISA offers real customer benefit at a time when other more established methods of growing investors’ wealth are suffering their own challenges,” Wombwell-Povey said.

Peer-to-peer
The P2P sector has not been without controversy, and some investors might question how robust it will be if or when there is a recession. Late in 2016 the FCA said it had found evidence of harm to consumers from peer-to-peer lending and that it was consulting on new rules. The regulator is particularly worried about what happens to investors if a large number of borrowers default. This publication examined the world of such "alternative finance" back in 2015, for example. 

Some organisations in the space, such as Lendinvest, have changed what sort of investors can access the asset class.

Orca, which provides data about the P2P space, has shared its thoughts about innovations in the space here.