Advice to invest in peer-to-peer lending may now be covered by FSCS
14th April 2016
FSCS may be able to compensate eligible investors in relation to unsuitable advice they receive about the merits of investing in peer-to-peer lending via loan-based crowdfunding platforms.
Depending on individual circumstances, FSCS may be able to provide compensation of up to £50,000 in relation to investment advice.
Peer-to-peer lending sites have been regulated by the Financial Conduct Authority (FCA) since 1 April 2014.
A peer-to-peer advice claim would need to meet all of the following criteria:
- the advice you received to buy the investment must have been given on or after 6 April 2016;
- the firm that advised you must have been authorised by the appropriate regulator to do so at that time;
- you must have lost money as a result of the advice you were given; and
- the firm (or its principals) no longer has sufficient assets to meet claims for compensation.
The particular peer-to-peer loan agreement will also need to meet the requirements for the FCA to consider it to be a ‘P2P agreement’, which will depend on individual circumstances.
FSCS does not provide compensation in relation to loss caused by bad investment performance.