Five misconceptions about P2P lending

This is a financial promotion and is intended to provide information, not investment advice.

Peer-to-peer lending has been part of the UK investment landscape for more than 20 years. Yet despite its growth, there are still a number of myths and misunderstandings about the sector.

We have broken down some of the most common misconceptions below, and explain what P2P lending really means for investors.

1. P2P lending is not regulated

Every UK-based P2P lending platform must be regulated by the Financial Conduct Authority (FCA). This means that platforms must meet strict standards around transparency, safeguarding client money, and treating customers fairly. While FCA regulation does not remove the risk of loss, it does ensure there is proper oversight and that platforms operate within a clear legal framework. If you are unsure of a platform’s regulatory status, you can check it on the FCA register[1].

2. P2P lending is not liquid

Traditionally, P2P lending works when a group of investors collectively loan money to a borrower, with an agreement that the money will be paid back at a set rate across a set period of time. In this sense P2P lending is not liquid, as your capital investment is tied up until the end of the loan term. However, some P2P lending platforms – like easyMoney – are able to offer an element of liquidity by running a secondary market where loan parts can be traded. This gives investors the option of cashing out of their loans early, if a buyer is available.

3. P2P lending is only for the super-rich

P2P lending should be for everyone. That’s why platforms such as easyMoney offer a range of accounts tailored to different types of investors. For example, our Premium Account can be opened with a minimum investment of just £100, making it accessible to most UK investors. However, we also offer a Premium Plus account with a minimum investment threshold of £20,000, and High Net Worth and Professional accounts with minimums of £100,000 and £1m, respectively.

4. P2P lending is the same as payday lending

P2P lending is not the same as payday lending. Payday lending is a form of consumer lending where borrowers can take out relatively small loans over a short period of time, usually less than 30 days. While there are a few P2P lending platforms which specialise in short-term consumer loans, this is not the industry norm. Most P2P lending platforms in the UK focus on asset-backed property loans or business loans, where risk can be managed with collateral.

5. P2P lending is not tax efficient

All P2P investments by UK resident individuals are eligible for inclusion in the Innovative Finance ISA (IFISA). The IFISA is a member of the ISA family, which means that investors can use it to shield up to £20,000 per year from taxation. easyMoney’s award-winning IFISA also accepts transfers in, so existing ISA balances can be added to your easyMoney IFISA account without breaching your annual allowance.

Some P2P lending platforms also allow investors to hold their investments within a self-invested personal pension (SIPP) which allows for further protection from taxation over time.


Capital is at risk. Past performance is no guarantee for future results.

Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future.