The UK peer-to-peer lending industry is staging a recovery after a turbulent period that saw several platforms collapse and regulatory requirements tighten substantially. Figures from the Peer-to-Peer Finance Association show that total lending through its member platforms reached £3.8 billion in 2025, up 22% on the previous year and the first significant growth since 2019. The resurgence has been driven largely by institutional investors, including pension funds and family offices, which now account for roughly 60% of capital deployed through the sector.

Folk2Folk, Kuflink and CrowdProperty have emerged as leading platforms in the post-shakeout landscape, focusing on secured property lending where default recoveries tend to be higher. Stuart Law, chief executive of investment platform Assetz Capital, said the sector had "learned hard lessons" from the failures of Lendy and FundingCircle's retreat from retail lending. "The platforms that survived are more conservative, better capitalised and far more transparent about risk," he told AltFi. Returns for institutional lenders have averaged between 6.5% and 9% annually, comfortably above bank deposit rates.

Retail participation, however, remains subdued. The FCA's post-authorisation requirements, which mandate that platforms classify most P2P investments as restricted to sophisticated or high-net-worth investors, have effectively limited access for everyday savers. Consumer finance expert Sarah Coles of Hargreaves Lansdown noted that while the improved regulatory framework has made the sector safer, "the average saver is unlikely to encounter peer-to-peer lending as an accessible option." Industry bodies continue to lobby for a more proportionate retail regime, arguing that the current rules unnecessarily exclude smaller investors from attractive yields.