The amount of money lent through the peer-to-peer sector increased by 121% in 2013, when compared to the previous year, figures from the Peer-to-Peer Finance Association show.
By the end of the fourth quarter in 2013, cumulative lending in the sector had hit £843m, compared to just £381m in the same period of 2012. The figures demonstrate how fast the sector has grown since it first began in the UK in 2005.
Peer-to-peer lending is a method of debt lending that allow individuals to borrow and lend money without using an official financial institution as an intermediary.
Christine Farnish, chair of the Peer-to-Peer Finance Association, said, “2014 will be a significant year for the industry. We are about to pass the £1 billion milestone of total monies lent and in April we become regulated by the Financial Conduct Authority, something we strongly support.”
According to data published by the charity Nesta last year, alternative finance intermediaries, including sources such as crowdfunding, peer-to-peer lending and invoice trading, raised almost £1 billion in 2013.
Daniel Rajkumar, managing director of lending platform rebuildingsociety.com, commented, “With regulation of the peer-to-peer market in effect from April 1 and plans to include the asset class of ISAs, this could be the start of a huge upsurge in lending volume, with UK businesses and creditworthy consumers set to benefit from better value loans.”
The Treasury is currently in discussion around extending the ISA regime to include peer-to-peer and debt-based lending. The move could potentially provide savers and investors with flexibility, transparency and control over their finances.