Significant Interest From Private Pension Holders To Include P2P Loans In Their SIPPS

  • Some 25% of respondents said they have already invested or were interested in investing in P2P loans via SIPP
  • Access to fixed returns (34%) followed by the ability to secure higher returns (26%) were the two factors cited as the most compelling reasons to invest in P2P loans
  • Lack of FSCS protection (53%) and money being at risk (52%) and a perception that the market is not adequately regulated (31%) were the biggest deterrents to investing in P2P
  • Some 33% of respondents said that if they thought the market was properly regulated it would be a positive key factor in persuading them to invest in P2P loans
  • Close to 34% said that they would hold 1-5% of their SIPP investments in P2P loans, over 25% said they would hold between 6-10%, while 15% said they would be happy holding above 10%
  • Shares (43%), cash (33%) and unit trusts (29%) and investment trusts (22%) were the most common SIPP investments, with ETFs next (17%), gilts/corporate bonds (13%), commercial property (7%) and cryptocurrencies (6%)
  • A quarter (25%) of respondents have a low cost SIPP, where no investment advice is provided, while 13% have a full SIPP, where experts provide guidance on investments
  • Just over 50% said that they reviewed their SIPPs annually, close to 15% weekly, some 12% monthly and close to 8% of respondents said they did so daily

According to the BLEND Network research, two key factors account for the robust interest by private investors in P2P loans via a SIPP: access to fixed rate returns and higher returns than comparable offers. However, the findings also indicate that if concerns regarding regulation and investor understanding of the evolving sector is improved then this could substantially increase the level of interest in investing in P2P loans via a SIPP.

From the survey results it appears that the FCA’s recent announcement of measures to better regulate the sector, involving investment limit for restricted customers to 10% of their net assets in non-readily realisable securities, use appropriateness testing to ascertain whether individuals are able to invest, which BLEND Network already uses and setting out the minimum information that P2P platforms are required to provide to investors, need to be better publicised so investors are more fully informed.

Also some 26% of respondents said that a lack of familiarity with the product was a key factor in why they had not invested in P2P platforms, so again better education of investors with the P2P Finance Association perhaps potentially playing a leading role could be beneficial for the sector.

The maximum amount of P2P investments that the survey respondents said they would hold in a SIPP was around 10%. Naturally, shares (43%) were the most popular asset class, followed by cash (33%) and unit trusts (29%). Of other assets, investment trusts (22%) ranked next, followed by ETFs (17%), gilts and corporate bonds (13%), commercial property (7%) and crypto currencies (6%).

The survey was conducted over the past month of over 1,000 office workers on how they managed their SIPPs and their attitude towards including alternative finance and P2P investments in their SIPPs.

Yann Murciano, CEO of BLEND Network, commented:

The findings of our research clearly reflects significant demand among private pension holders for access to P2P lending via SIPPs. It also indicates reservations on the part of investors around regulatory developments and understanding of the product, which if addressed could significantly increase investor commitment to the sector.

The Government, FCA and organisations such as the P2P Finance Association have the opportunity to address the concerns the SIPP holders we surveyed expressed and further help the growth of the P2P sector, which is helping to broaden the investment choices investors have as well as provide additional funding options for the UK’s growth businesses to help them scale and make an even greater contribution to the UK’s economic growth and performance.”

Author: Yash Hirani

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