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Swift Early Access Cannot Be Guaranteed

By Matthew Howard on 16th February, 2015 | Read more by this author

At least one P2P lending company continues to make some unsupportable claims.

The financial regulator recently reported that it's had to ask P2P lending companies to stop bigging up the benefits while talking down the risks.

Jane thinks the regulator gave the industry a B-. (Read Financial Regulator Gives B- Grade to P2P Lending.)

Fruitful's turn for a stern word

I wonder whether the regulator has already paid a visit to a P2P lending company called Fruitful. Probably not, because it's just a few months old.

But today I got an email from Fruitful promising “zero lock-ins”.

Partly what the company is saying is that lenders can lend for many years and get the higher rates we'd expect for doing so, while still being able to access our money early.

This is not unusual. Almost all P2P lending companies allow you to access your money early, provided someone else is available to buy your loan parts off you.

The questionable bit is calling it “zero lock-ins”, which suggests that you will always be able to get your money back swiftly.

I guarantee you that this will not always be the case.

Sometimes you'll have to wait for your money

There will be times when lots of lenders need or want their money in a hurry. If there are far more people trying to exit their loans than there are lenders who want to buy those loans, you're probably going to have to wait. And you might have to wait many months during the most extreme economic times, perhaps while borrowers steadily repay you.

Fruitful's email then led me on to its website to a web page that reinforces this zero lock-ins promise, but still without explaining the risk of having to wait.

Fruitful intimates that you will always be able to exit early due to others buying your loan parts and a “continuous flow of repayments” from borrowers. Fruitful concludes “…savings, ready for when you need them.”

At least I hope this is only a marketing error. There is a far more worrying alternative: that Fruitful actually does believe it will always be able to repay you your money swiftly.

I know next to nothing about Fruitful. But it is far from the only one to have been a bit too keen to sell its benefits.

It doesn't matter how fluffy and nice any industry is: even one helping the “crowd”, like P2P lending, and with its excellent customer satisfaction rates. There will always be companies that forget to be balanced and fair with their customers. Some will be more forgetful than others.

I'm bound to warn you of some more overzealous sales claims in the coming months.

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