£50,000 payout hope for P2P investors who feel badly advised
Investors who feel they received bad advice about the merits of investing with peer-to-peer (P2P) lenders may be able to claim as much as £50,000 from the UK's savings safety net.
The Financial Services Compensation Scheme (FSCS) said it may be able to compensate investors if they receive unsuitable advice about the merits of investing in P2P lending via loan-based crowdfunding platforms.
The FSCS said it might be able to provide compensation of up to £50,000 in relation to P2P investment advice, depending on the individual circumstances.
But it will not provide compensation just because someone has made a loss due to poor investments - so people still need to bear in mind the potential risks.
The P2P lending industry has taken off in recent years. P2P lenders act as middlemen, matching people with some cash to invest with those who want to borrow.
Often, the potential returns can be much greater than people could get with a standard bank or building society savings account. P2P lending websites have been regulated by the Financial Conduct Authority since April 1 2014.
P2P lenders have recently been brought further into the mainstream as investments with them can now be brought into Isa saving, with the launch of new Innovative Finance Isas.
The FSCS, which also protects people's cash in the event their bank or building society goes bust, said a P2P advice claim would need to meet the following criteria:
:: The advice you received to buy the investment must have been given on or after April 6 2016;
:: The firm that advised you must have been authorised by the appropriate regulator to do so at that time;
:: You must have lost money as a result of the advice you were given;
:: The firm no longer has sufficient assets to meet claims for compensation.