Money Alert: Alternative Finance

Alternative finance, such as peer-to-peer lending and crowdfunding, is doubling in size every year and could reach £4.4bn in 2015.

Around £1.74bn will have been raised by the end of 2014, according to the University of Cambridge, and that’s set to more than double next year, reckons Nesta, an innovation charity.

Its report suggests that the alternative finance market – which gives investors direct access to borrowers – has soared from £267m in 2012, and £666m in 2013, to £1.74bn this year. Liam Collins, the report’s co-author, said: “Alternative finance is a growing movement that is revolutionising banking, investing and giving by using technology to simplify the links between those who want to invest money and those who need it.”

Meanwhile the peer-to-peer firm Lending Works has improved the protection given to investors by launching extended insurance for all its loans. The company says the policies will safeguard savings against the risk of borrowers not repaying loans because of accident, illness, death or job loss.