P2P Lending: Peer less - FT.com When is a shadow bank not a shadow bank? When it is a trendy peer-to-peer lender. This week Lendinvest, a UK-based P2P lender, has co-ordinated hundreds of private investors in making the world's largest P2P loan, sending £4m to a property developer in the south London suburb of Croydon. It is more than double the previous largest loan. Lendinvest is not the only one in this sector that is thriving. Lending Club, the leading US P2P lender, grew its loan book at an annualised rate of 150 per cent last year. This is no bad thing. Money gets from those who have it to those who need it, while the banking sector gets some much-needed competition. But anyone thinking of putting their money into this sector as a depositor (sorry, investor) needs to take a close look at where the money is going. Property, the spiritual home of the 2008 financial crisis, is one big destination. Three quarters of LendInvest's £26m loan portfolio has gone to property developers. Meanwhile in the US, 83 per cent of Lending Club's loans simply refinance other loans - investors are hardly building new companies. Protection for the investors who put their money on the line is a thorny topic. There is no deposit insurance. Some P2P lenders hold "provision funds" to cover losses. But the use of these funds, if they exist, is entirely at the discretion of the directors of the P2P groups that organise the loans. They may not provide a level shelf if things go wonky. No surprise that the UK's Financial Conduct Authority will begin oversight from April. But regulators across the world need to take a tough - and co-ordinated - line. Lending standards will inevitably slip as competition intensifies via new entrants. You cannot build earthquake-proof homes on sand.