Finance: Peer-to-Peer Lending

Baroness Wheatcroft Excerpts

Wednesday 19th December 2012 Lords Chamber

Asked By

[Baroness Wheatcroft]

To ask Her Majesty’s Government what is their assessment of the impact of peer-to-peer lending on major financial institutions.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords—

[Lord Sassoon]

Wait for the Answer—but I believe it is a good news story.

Peer-to-peer platforms are currently small in the context of the UK lending market but they are growing fast. It is too soon to assess what impact they might have on other financial institutions but, over time, we expect alternative forms of finance, including peer-to-peer platforms, to bring additional choice and greater competition to the lending market.

[Baroness Wheatcroft]

I thank my noble friend for his response. This positively being his last time at the Dispatch Box, I take this opportunity to thank him for all his work there.

[Noble Lords]

Hear, hear.

[Baroness Wheatcroft]

Although there is a place for peer-to-peer lending, small firms really require lenders who understand their business, who can see them through difficulties as they arise, who understand what they need in the way of advice and who certainly will not pull the rug away from them at the first sign of difficulty. The Government are doing what they can to encourage lending to small businesses but can my noble friend tell me whether they are managing to encourage a longer-term approach?

[Lord Sassoon]

My Lords, I am grateful for my noble friend’s remarks. I certainly agree that we want diversity in lending. I do not believe that p-to-p lending will solve every problem but I think it has an important role to play. Alongside the money that BIS put in to support two of the p-to-p businesses only last week, through the Business Finance Partnership, BIS also put some money into funds managed by lenders that I think will probably fit more with my noble friend’s model. It is also worth noting that some of the new bank lenders, such as Aldermore, have been some of the biggest takers, relatively, of funds under the Funding for Lending scheme. I agree that diversity is needed.