Funding Circle is absolutely dominating Britain's peer-to-peer lending industry

LONDON - Britain's peer-to-peer lending industry enjoyed its best quarter of the year in the final three months of 2016, led by big volumes at Funding Circle.

New figures from industry body the Peer-to-peer Finance Association (P2PFA) show its eight members, which include Britain's three biggest platforms, collectively lent £843.9 million in the final quarter of 2016.

That's over £100 million more than in the first quarter, the next best period of the year, and takes the total lent over peer-to-peer platforms to £2.9 billion.

Peer-to-peer lenders are platforms that connect investors with either businesses or consumers looking to borrow money. These platforms cut out banks and other middlemen who often sit in the borrowing process and offer high returns to investors.

The P2PFA figures point to a sustained recovery from jitters surrounding last year's Brexit vote. Lending volumes declined between the first and second quarters of 2016 as uncertainty before and directly after the vote to leave the European Union put off investors.

Robert Pettigrew, director of the P2PFA, says in an emailed statement: "Whilst uncertainties in the broader economy attract much comment, it is clear from the robust growth in levels of peer-to-peer lending that P2PFA platforms and their investors are positive about the future."

James Meekings, Funding Circle's UK MD and cofounder, told Business Insider during an interview last week: "There was a period following the vote where both on the investor side and the business side uncertainty was challenging. But what we've seen since then is a huge amount of growth in origination.

"Quarter four in the UK was actually 90% up on the year before. What we're hearing from our borrowers now is that they're more certain that uncertainty will continue for longer, and therefore they are continuing with their investment decisions."

The strong year-end for the sector was largely driven by Funding Circle, which accounted for £305.9 million of the £843.9 million lent in the third quarter, or 35% of all lending.

The strong performance means Funding Circle is close to overtaking Zopa, the platform credited with inventing peer-to-peer lending in 2005, in terms of lifetime loan value. Funding Circle, which lends to small businesses, has lent £1.83 billion since launch in 2010. Zopa, which lends to consumers, has lent £1.92 billion since launch.

Pettigrew says: "Levels of lending to businesses through P2PFA platforms has gained considerable momentum over the course of recent quarters, and as investors focus on what might emerge from the post-referendum uncertainty, the position of peer-to-peer lending as a major part of the solution in a post-Brexit world is unquestionable."

While the P2PFA's figures show strong growth for most members, property lending platform Landbay continued to see just a trickle of investment on its platform. Business Insider highlighted that its lending volume fell from £5.3 million in the second quarter of 2016 to just £283,000 in the third. That slowed to £194,119 in the fourth quarter.

That slowed to £194,119 in the fourth quarter. Landbay was this week approved as an ISA manager by HMRC, paving the way for the platform to launch an "Innovative Finance ISA" for its peer-to-peer mortgage products.