Despite a decade on the market, 56% of consumers have never heard of peer to peer lending accounts. Of those that have, just 28% would invest in one and 20% simply don't understand them.

Of those that wouldn't invest, lack of protection from the FSCS is the biggest barrier to entry as more than half (55%) cite this as a major concern - 54% simply don't trust the providers to keep their money safe.

30% wrongly believe the industry isn't regulated, despite FCA intervention in April 2014. 11% think the products only target people with large deposits - in fact some providers accept investments from just 10.

Peer-to-peer providers offer average returns of 4.4% p.a. on three-year fixed rate accounts, almost double the average 'best buy' three-year fixed rate savings account paying just 2.5%.

Based on a savings pot of 10,000, consumers could be missing out on almost 479 of interest over three years by shunning these products.

As the peer-to-peer lending market reaches its tenth birthday, new research released today1 from price comparison website money.co.uk reveals that more than half of consumers (56%) still haven't heard of these products. Of those that have, just over one in four (28%) would consider investing in them.

However, with 40% of those surveyed claiming they would consider investing their money into a peer-to-peer product if they could do so under their tax-free ISA allowance, market growth could increase rapidly in coming years if the Government decides to finally give this legislation the green light.

Despite a relatively small consumer appetite, the market is currently worth 2.1 billion2, a figure which doubled in 2014 as dwindling mainstream savings rates forced more consumers to expose themselves to greater risks. In fact, just 6% of those surveyed claim they have taken the leap of faith; investing an average of 7,186 in one of these alternative financial products.

With returns on three-year fixed rate peer-to-peer deals outstripping the average best buy three-year fixed rate savings accounts by 1.89%3, these investors could be enjoying a total return of 775.84 at the end of a three year term.

Concerns around the security of these products are not completely unfounded as they are not protected by the Financial Services Compensation Scheme (FSCS). The FSCS pays compensation of up to 85,000 per regulated financial institution to people (or 150,000 in the case of joint accounts) who find themselves out of pocket because a bank or other financial service provider goes bust.

The absence of FSCS protection seems like one of the biggest barriers to entry, with 55% of those surveyed citing this as one of the main reasons they would not consider investing -54% don't trust the lenders offering these products to keep their money secure.

Almost one in three (30%) of those that would not invest in a peer-to-peer product wrongly believe the industry isn't regulated. In fact, the FCA has been working with peer-to-peer providers since they took charge of regulation in April 2014. At this time, the FCA stipulated that peer-to-peer lenders had to ring-fence their loan portfolios and maintain a capital "buffer" of at least 20,000 in case they run into financial difficulties.

From April 2017, this must increase, so that lenders must have a minimum of 50,000 in a provision fund, or more depending on the total amount lent out. Lack of understanding is the reason why 20% of consumers would not put their money in the hands of a peer to peer lender.

Hannah Maundrell, Editor in Chief of money.co.uk, comments:

"The Government has been toying with the idea of allowing people to invest their ISA allowance in peer-to-peer products for some time now, but a conclusive decision seems to be a long time coming.

"The industry experienced 100% growth last year as it seems poor savings rates are creating a greater appetite for risk amongst consumers. However, the prospect of a tax-free return is likely to be the 'shot in the arm' the industry needs to see accelerated growth in the immediate future with 40% more consumers claiming they would invest.

"Many of these products are complicated and simplification could lead to far more investors seeing these as a viable way to get growth. You can't escape the fact that there are some great returns on the table with providers offering up to 6% p.a.4 over five years.

"However, as with all investments, these accounts are not without an element of risk, so consumers shouldn't plunge their life savings in without understanding exactly how their money will be used. If you're tempted by the headline-grabbing rates, you should dip your toe in the water and start with smaller investments to see if it's the right choice for you."

Notes to editors:
1. Research was carried out amongst 2,484 members of the money.co.uk opinion panel from the 20th to the 25th February 2015. All calculations are based on consumer research and money.co.uk market analysis
2. Peer-to-Peer Finance Association (P2PFA) - February 2015
3. This is based on the comparison of an AER and a gross rate and is used for illustration purposes only
4. All peer-to-peer accounts quoted in this release are those with directly comparable features