Lost money due to dodgy P2P advice? You may receive compensation
Peer 2 peer lending has attracted the attention of interest-starved investors but one of the main criticisms and risk of the industry is that it’s not covered by the Financial Services Compensation Scheme (FSCS).
Currently up to £75,000 is protected if it’s deposited into a UK-regulated bank, building society or credit union so if anything were to go wrong, you’d get your money back.
P2P lenders don’t afford the same protection so if the worst happened, the government wouldn’t help you.
But the FSCS said that it “may be able to compensate eligible investors in relation to unsuitable advice they received about the merits of investing in P2P lending via loan-based crowdfunding platforms”.
It added that depending on individual circumstances, it may be able to provide compensation of up to £50,000 in relation to investment advice.
However, in order to be eligible, a claim must 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 (P2P lending sites have been regulated by the Financial Conduct Authority (FCA) since 1 April 2014).
- 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.