The Financial Conduct Authority (FCA) has instructed independent financial advisers (IFAs) that they are obliged to “form their own opinion” of the risk of any investment in peer-to-peer (P2P) lender platforms, the chief drivers of the UK’s alternative finance sector.

The remark, which was in an FCA policy statement released this week, follows concerns raised by IFAs in a consultation during February that it was not possible for them to conduct due diligence on P2P lending products. As a result, they could not offer advice on them with confidence.

The policy statement makes it clear that the FCA intends to include P2P agreements within its definition of a “designated investment business”, which means that they should be treated similarly to all other regulated advice. As a consequence, advice on P2P products will need to be compliant with suitability requirements.

The regulator stopped short, however, of making it compulsory for independent advisers to consider P2P products.

The new FCA statement referred to existing rules governing when IFAs can place reliance on other persons: information provided in writing by “an unconnected authorised person or a professional” would be sufficient, unless the IFA is aware of any fact that would provide grounds for questioning the accuracy of the information.

The statement continued: “Advisers must form their own opinion of the risk of any investment and advise their clients based on this opinion.

"If an adviser is unable to form an opinion based on the information available, then the correct response is not to advise the client to invest in that product.”

P2P lenders such as Unbolted minimise risks to investors and borrowers by collateralising valuable borrower assets for secured asset loans.