Pritchard said this is needed before sales can become advised only.
Terry Pritchard, chief executive of Charter HCP has called for a standardised reporting structure for the peer-to-peer (P2P) industry.
He said that that is the way forward for the sector and is needed before sales can become advised only.
This comes after Anthony Morrow, chief executive of robo-adviserOpenMoney andPhilip Sinel,barrister andlitigation lawyer at Sinels Advocates, told The FT Adviser a ban on non-advised sales is needed.
Pritchard agreed with the idea but said it would take a few years to implement. He said for it to happen, first a standardised reporting structure needs to be introduced and its vital advisers are educated more.
He said: “Banning non-advised sales would bring the whole market down in about 20 minutes. If investors in P2P have to go through advice on whether to go through P2P, advisers would tell clients they have to go for another product.
“As much as I agree with it, it’s an idealism and it’s not practical for the industry and will limit people’s ability to invest in that as advisers will go for the safest option in their mind and not what may be best for the client.
“Advisers may look at all the P2P headlines and think ‘is that the best option, I could be sued for it later on, look at what happened with Lendy’.
“I would agree with having advised sales only, but it’d have to be done correctly and would take time.
“The adviser has to be properly educated. They need to know about each firm. Insurance companies live by legislation, saying ‘this is what you can say when reporting’ and we don’t have that with P2P.”
Pritchard said with other firms like Aviva you can see their returns, while with P2P funding it’s difficult to quantify how each firm has performed because there are no central records.
He added: “We haven’t at the moment got a central regulated database recording their returns, that’d have to be in place first and would take time. You need a standardised reporting structure.
“At the moment we don’t have that so you can’t compare investment in P2P with ISA investment and things like that and people have to be able to do that for investments.”
Pritchard said that you need a reporting structure that covers everybody where companies report what they’ve done in a certain time period. And on that basis the adviser would have the relevant information to support their clients.
Pritchard said: “Practically it’s three to four years away to get to that.
“At the moment P2P lenders are advertising to the marketplace with their own internal figures and they’re marketing. You need a standardised reporting structure so advisers can do that correctly.”
Stuart Law, chief executive and founder of marketplace lender Assetz Capital, said that he disagrees with the view that non-advised sales of peer-to-peer products should be banned.
He said this is on the basis that independent financial advisers (IFAs) are not taking the time to understand the sector, and as a result, investors are missing out on good opportunities.
Law added: “IFAs should not be required to advise those individuals who have thoroughly researched the sector and are well-informed enough to make their own decisions.
“Assetz is among a handful of companies in the P2P sector that go the extra mile to protect its investors, and it is now up to the IFAs to educate themselves on P2P to ensure they are offering well-rounded advice to their clients.
“We would welcome advisers to come to one of our open days so they can gain an understanding of our business and the wider P2P sector, but thus far, we have seen very little interest or engagement.”
