Peer-to-peer (P2P) investing has exploded in popularity in the past two years as investors seeking high rates of interest flock to loan out their cash directly to consumers, small businesses or property developers. But this year two of the UK's largest lenders – Zopa and RateSetter – have hit issues with liquidity and bad loans. Has P2P hit problems?
Zopa closed to new customers as it struggles to match lender demand
Zopa is the UK’s oldest P2P lender and is one of the only companies to have been authorised by the Financial Conduct Authority (FCA) to provide an Innovative Finance Isa (Ifisa). But it has repeatedly closed to new money since December 2016 after finding itself unable to match soaring lender demand with borrowers to loan to. In December Zopa wrote to customers telling them that it was suffering a seasonally low period for borrower requests.