How safe is peer-to-peer lending?

GAETAN BALLY/Keystone Switzerland

Dismally low savings rates over the last few years have prompted a huge rise in popularity of so-called peer-to-peer (P2P) lending sites.

There is a however a new warning over these sites after one of the smaller players - Quakle - collapsed. The Financial Services Compensation Scheme (FSCS) has warned that customers have no safety net to fall back on should borrowers not repay their money.