Where do you think your money is safest?

No lendinvest on list?

I think you should also consider the risk vs reward.

You can easily obtain 5% in a bank account with next to no risk, so if your investing in P2P for returns around that or less, then why are you taking the risk? 

With Ratesetter's current rates on average being around 5%, I can't see why people think this is the safest?

I can get 5% in a bank account at tsb on £4000. I could get 5% on £2500 at nationwide for a year.

What happens when those are full?
I could look at the 4% and 3% accounts or I could try p2p.

Once the high return bank accounts are filled, the next level of risk is the safest perceived p2p platform.

I wouldn't have bothered with p2p if tsb allowed you to save an unlimited amount at next to no risk with a 5% return. I definitely wouldn't be here if my high interest accounts were not at the limit.

Saying that, I'm very happy with the level of risk at ratesetter and have branched out into other more risky platforms, although some of that I see as more play money at this stage.

Interesting table, and I am pleased to see RateSetter doing well. Hopefully we won't get complacent and keep boring, even during future recessions.

Personally though I think the market has already spoken in terms of the "risk premium", basically how much extra return you expect to earn over 100% safe FSCS protected cash or premium bonds. All else being equal (i.e. ignoring customers laziness to move reinvested money, slicker marketing, business fraud, etc), the rate of return should equal perceived safety. Big assumption I know.

So although I don't agree with the findings, the lowest returns on 5-year money are currently with Zopa, ergo Zopa is the safest P2P platform in the UK. RateSetter is the perceived second with 6% plus AER (more or less, close to a few other platforms) and hence is first on this table. All the other platforms give a higher return and therefore the market has deemed them a riskier investment. The return would be lower if the platform could pay less and still attract the money (they'd offer their clients lower APRs, or pocket the difference).

westonkevRS

Yes, I also don't agree with the findings. Zopa isn't included and it's the platform that I think is likely to be perceived as lowest risk and get most votes if it was there. I assume that the poll creator has no intention of using Zopa and just wanted opinions about the ones they were considering using.

Of course I don't consider Zopa to actually be the lowest risk because there is no security for their P2P loans. Platforms that combine both security and a protection fund or buyback mechanism of some sort should be lower risk except possibly on platform or currency (Mintos) risk.

A huge assumption and I think it's badly wrong in this case, with marketing and time in business and brand awareness being key factors, along with just not including some potentially lower risk platforms in the options that could be selected.

At the moment the market seems to be quite inefficient, with opportunities to exploit mispricing of many sorts abundant, both within P2P and between P2P and other investments.

1k or 2k.... Tsb current account. Or nationwide FD for 1 year. Beyond that (ignoring regular savers) you start talking 4% or 3%. But you can get to around 50k in Fscs backed accounts at 3% or over if you spread it around, more if you have a significant other and share 2x single and 1x joint accounts.

Ratesetter's provision fund is small, only enough to cover loss of a few percent of the loan book. Compare to say a place that does secured lending where 100% of the loan book value can be protected by security. Now add to the security a buyback or substitution with no lender loss undertaking by a loan originator and even if the security has to be realised and turns out to be insufficient the lenders won't suffer unless the originator itself fails.

Examples of places where the raw lending risk is way below Ratesetter and the low level of cover its protection fund provides could be say:

1. The Just ABL loans available on at least two platforms where they take the loss and substitute a comparable loan while they realise the security, so providing both secured lending for something around 100% of the loan book value and a buyback/replacement guarantee.

2. The pawn-based lending done by MoneyThing where the pawn shop based loans not only have low LTV but the pawn shop chain takes the loses first if there are any.

However, the platforms themselves have a risk component so even though those two loan examples are way below Ratesetter in raw lending risk, the overall picture of Ratesetter could still look better to lenders.

Of course this doesn't mean that RateSetter is bad, just that there's a huge difference between a few percent and 100% protection. It also doesn't mean that security by itself is sufficient. That security has to actually be correctly valued and collectable and in at least one case a platform doesn't seem to have been doing a particularly good job on that front, to the point that people make jokes about it by distorting its name. Then there's platform risk and marketing, two areas where Ratesetter should be doing very well.