Awareness of peer-to-peer (P2P) lending is increasing, but people don't fully understand how it works, and aren't aware they could lose money, or have to pay tax on their earnings, according to a survey funded by the Yorkshire Building Society.
There is some feeling in the crowdfunding industry that the survey is a piece of scaremongering. After all, banks and building societies currently offer savings products with yields at or close to historic lows. The survey focuses on awareness of security - an area where deposit-type savings accounts benefit from the Financial Services Compensation Scheme. Let's examine the survey.
Yorkshire Building Society comissioned research through YouGov in January to test the public's awareness of peer to peer lending. Out of a random sample of 1,541 UK adults, 42 per cent said YES, they had heard of this new financial service. But when tested on how much they knew about it, the poll revealed that relatively few fully understood the detail of how P2P lending actually works.