Clarity is the new fashion trend, but property schemes are apparently behind the curve.
According to Fitzrovia Finance, a UK secured property lender, 75% of the clients in the UK’s top twenty schemes mistakenly think first charge secured loans are riskier than second charge mezzanine options.
As reported by FTAdviser, Fitzrovia Finance’s June study delivers some other troubling stats: 18% of the retail investors didn’t think the property investment platforms made risk factors understandable.
When it comes to property investment schemes, risk and returns are highly variable. Fitzrovia Finance’s CEO, Brad Bauman, stated, “‘The industry must strive to ensure that each opportunity promoted to private investors is clearly explained, the risks are transparent and the returns appropriate.'”
We reported earlier that another study stated advisers felt a similar lack of clarity when it comes to platform charging fees.
P2P lending has been increasing, and regulatory bodies have taken notice. The Financial Conduct Authority is bringing in regulations to prevent investors from allocating more than 10% of their assets in P2P investments. However, they can circumvent this ban if they’re receiving financial advice.
Across the financial services industry, it is becoming more glaringly obvious where transparency is needed.
