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Peer-to-peer lending is a relatively new type of business arrangement. Peer-to-peer lending sites are, in essence, an intermediary service connecting investors who have money available to lend with individuals, partnerships or unincorporated bodies who need to borrow. The investor puts in a lump sum using the peer-to-peer platform and this is then lent in small sub-loans (of £25,000 or less) to a number of borrowers¹. The breakdown of the investment into multiple small sub-loans, spreading the risk of default across several borrowers, is the novel aspect which peer-to-peer lending brings to retail investment. The ability to lend directly to a varied collection of borrowers gives an individual with a peer-to-peer lending portfolio access to diversified lending opportunities which were previously only available to retail investors via collective