Newbie here - a couple of simple questions

Why not to invest in P2P, from Ratesetter, but the same applies to other P2P lending:

"Capital is at risk and your money is not covered by the Financial Services Compensation scheme"

The cautious risk averse lender looks for some sort of protection, such as a "Provision fund" and/or "Security" and/or "Insurance" and a company that has a good track record.

The biggest sites are Zopa and Ratesetter, and Wellesley are growing fast, so you mare care to look at those first.

The only really good reason is that you may not understand what you are investing in.  So, before choosing any P2P investment make sure you understand at least these things about every platform into which you think about putting money:
1) Does it have some form of investor protection (a backup fund, or underlying assets)?
2) How fast will your money really move out of a lending queue? 
3) Do you have the time to manage your P2P investment?

Historically most people started in P2P with Zopa.  I did so, but wouldn't invest a penny with them today.  You may want to check out Zopa's own Forum for the reasons why I say that.  See, amongst many others, the "It's not working" thread under Lending at talk.zopa.com/

So the mainstream options are Ratesetter, Wellesley and - if you have the time to spread your investment and understand the nature of the beast(s) - Funding Circle and ThinCats.  I invest in RS & Wellesley, but not FC or TC as I don't have the time or patience (or willingness to accept higher risk as I perceive it) required for them.

EDIT - a quick P.S.  If you know someone who already uses Ratesetter, get them to invite you to join RS.   That way, you will each get a £50 bonus per person (assuming you may have a partner) if you invest more than £1000 before March 2nd.  If you don't know anyone already in RS, I'm sure someone on this Forum would help you out!

I wouldn't be too alarmed by Wellesley not being members of the P2PFA, one of the reasons for their departure was the fact that the P2PFA rules prohibit members from using their own platforms to raise money to fund their own business, which is what Wellesley are doing with their bond product.

The reason for their raising money in this way is that they lend money to the borrower in the first instance and so need to increase their capital. It is this lending by Wellesley in the first instance and lenders lending money to Wellesley which is then assigned on a dynamic basis against loans that Wellesley have already made rather than the more traditional lending to borrowers which makes it possible for Wellesley to pay interest the moment you purchase on of their products and make their product more accessible to retail savers.

One thing to consider is liquidity. Some of the best rates are loans for 3 and 5 years and you can't be sure of getting your money back before that. Most do allow some early withdrawal, but this is relying on replacing you with someone else. Whilst p2p is growing this is easy so at the moment early exit is easy (though charges vary widely, I would only consider it on Zopa, the other two are too high). I wouldn't rely on being able to exit before the term. Having said that Zopa and Ratesetter (3 and 5 year) loans pay back some capital each month so a 3 year loan has repaid about half the capital after 19 months.

I split my money across more than one platform. If a platform fails you should still get your money back, but this is the one thing which worries me most. I would suggest that 12k is large enough to split across more than one lender. You should keep back enough to replace the washing machine etc.. As you want to remain cautious to begin with I would suggest that Ratesetter, Zopa and Wellesley are three for the top of your list. I think that Wellesley pulling out of the P2PFA is of concern. They claim they did it so that they can borrow from their own lenders which the P2PFA doesn't allow. This is credible and so far Wellesley seems to have a good reputation on this forum, and they interact with it as do Ratesetter. Zopa have their own forum which is why this one isn't so active.

One final point is that there is currently a consultation on a P2P ISA. I suspect that they wont get launched for a while yet, but keep it in mind.

I will probably have more time in the future to keep track of investments, but as we are about to move home and we are winding down our business, time is at a bit of a premium (quiet days/manic days kind of thing), so not having to keep an eye on what's happening every day will be the best idea in the short term to get us started.

me and the missus will split the £12K between us and open up separate accounts - any invites going around for both of us??  

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Remember who told you first! 

By the way, you only need one reference from us Forum-ites to get you started.  When you have your first RS account started, you can invite your partner to join, meaning you keep the £100 between the two of you, rather than hand £50 to someone else.   Every little helps.....

If you decide to join Zopa as well, the same routine applies....

I'll forgive you this once!   Welcome to P2P and to Ratesetter.   I wish you great success with your investments.  

One tip, if I may.   Take time to understand the amount of money flowing through Ratesetter's markets each day by looking at the various Ratesetter Info screens.  That way you'll have the knowledge/ confidence to place your money at a higher rate than might seem obvious to choose.