They’ve even got P2P loans in Ambridge!

WHEN I tune in to today’s omnibus edition of The Archers (guilt free for once as my husband is away on business) I’ll be catching up on the latest developments in Ambridge – not least the fate of missing pet ferret, Daphne.

But I’ll also be keeping my ears out for how Fallon, one of the radio soap’s feistiest female characters, is progressing with her plans to open a vintage tea room in the village.

Picking up on the common postfinancial crisis frustration of small businesses across the (real) land, Fallon knows she is unlikely to get a loan for her start-up from a bank. Her love interest, PC Harrison Burns, gave her some friendly financial advice in a recent episode, suggesting a peerto-peer loan as a way of drumming up cash.

The fact peer-to-peer – where ordinary folk lend direct to other individuals or businesses – is worthy of a mention in the script of a popular drama (and proffered as a solution by an upstanding member of the community at that) surely means this newest form of lending has reached the mainstream.

As I report on Page 94, this growing craze was born out of the twin forces of loan-starved businesses and exasperated savers who have seen rates on deposits squeezed till the pips squeak – with the added ingredient that it is all carried out online. Fallon appears doubtful that complete strangers would lend her the money. For a long while I leaned on the side of the sceptics, too.

While I understood the benefits for the borrower, being a saver – or ‘lender’ – seemed to carry far more risk. How much can I really know about the borrower taking my money, for example?

Providers have worked hard to allay such fears by encouraging lenders to spread the risk among numerous borrowers, getting themselves regulated collectively as an industry and building provision funds against bad debts.

There is still cause for plenty of anxiety – including the fact the Financial Services Compensation Scheme will not step in to refund a saver if a provider fails – as it would with a deposit account. There is also the fact that higher interest rates could lead to more defaults and make traditional savings look attractive again.

But for now I am taking it more seriously. At a financially astute friend’s place for lunch the other weekend, I asked where he

Fallon appears doubtful that strangers would lend to her. I used to be sceptical too

planned to invest in this new tax year. ‘Peer-to-peer, of course,’ he informed me. ‘Where else can you get returns of about six per cent?’

And next year, when the taxman plans to let us shelter these ‘savings’ in a tax-friendly Individual Savings Account as well as allow the interest element to count as part of our new £500 to £1,000 annual savings tax allowance, the argument will be even more compelling.

Awareness of peer-to-peer is low – less than half of us know what it is – and although £2billion is invested just compare that to star fund manager Neil Woodford’s eponymous equity income fund that has attracted £5billion of investors’ cash in less than a year.

But this could change. Fund broking giant Hargreaves Lansdown for one is throwing its weight behind the sector. Danny Cox, head of communications, says plans are under way to create its own peer-to-peer service within the next year as part of a grander ambition to become a one-stop marketplace for savings generally – allowing savers to switch to the best paying accounts at the press of a button. LOW interest rates disappoint savers but let homebuyers enjoy cheap-as-chips mortgages. Despite bargain rates though it seems buyers still have to go to extreme lengths to buy a home. A shortage of property on the market means vendors can pick and choose their buyers.

Research by QualitySolicitors, a network of high street law firms, shows stressed-out buyers will try anything from sweet-talking sellers, dressing up as if for a job interview and even bribery with home-baked cakes and flowers. Some will even show a vendor their bank statements to prove they have cash in the bank.

The network highlights this seller’s market with the tale of public relations consultant Sophie Morello, 29. She recently missed out on a property in Leytonstone, East London, because the rival bidder offered to take on the seller’s cat.

Sophie was one of only two prospective buyers to have agreed a price and only found out about the unusual deal-breaker through her estate agent, after her rival had exchanged contracts. She tells me: ‘It shows the lengths people are willing to go to and how much sellers are dictating the market.’

Small bribes and cat adoption aside, let’s hope these are not indicators that a return of gazumping is around the corner.