Folk2Folk

Folk2Folk Limited is a UK peer-to-peer (P2P) lending platform founded in 2013 that specialises in property-secured lending to UK businesses. The company is directly authorised and regulated by the Financial Conduct Authority (FCA) under FRN 720867. Folk2Folk gained full FCA authorisation for P2P lending in December 2016 and holds permissions to operate an electronic system in relation to investing, alongside related activities including credit broking, debt collection and debt administration.

The platform reports cumulative lending exceeding £820 million and has paid more than £17 million in interest to investors during the 2024/25 tax year. In 2025–2026, the platform appointed Kawai Chung as CEO and launched an "Inside Credit" initiative to increase transparency for brokers.

Folk2Folk operates a marketplace that matches investors with business loans secured by legal charges over UK land or property. Investors must register online, complete ID/AML checks and an FCA-mandated Appropriateness Test and investor categorisation before investing. Funds are held in a client money account until loan and security documentation are completed, and investors receive fixed monthly interest with capital repaid at loan maturity.

The platform states that investments are secured by a first legal charge against property and typically target maximum loan-to-value (LTV) ratios of around 60%, though LTVs are set on a per-loan basis. Folk2Folk also conducts borrower credit and affordability checks and an underwriting process before listing loans for investment.

Property security and conservative LTVs can help in recoveries if a borrower defaults, but security does not guarantee full recovery of capital; realisation depends on enforcement outcomes, costs and market conditions. A loan being "in default" does not automatically mean investors have suffered a capital loss — capital loss is only realised if recovery proceedings fail to return outstanding capital after costs.

Folk2Folk's main investor product is Business Loan Investments — individual loans to businesses secured by property — and an Innovative Finance ISA (IFISA) wrapper for tax-free interest where eligible. Investors can also invest via SIPP subject to SIPP provider approval.

The published minimum investment per loan is £20,000 for individuals and £250,000 for corporate, institutional, trust and charity investors. There are no platform account opening or ongoing management fees for investors; investors are paid the advertised interest rate on each loan. A fixed fee of £250 is charged to list an investment for sale on the secondary market, whether or not the sale completes.

The platform advertises a typical interest rate of 8.50% p.a. for many loans. Folk2Folk reported paying £15.78 million in interest to investors in the 2023/24 tax year and £17.32 million in 2024/25. These are historic amounts paid, not guaranteed future returns.

Folk2Folk is aimed at UK tax residents aged 18 and over who meet the FCA's investor categorisation and appropriateness requirements and who understand P2P lending risks. The £20,000 minimum per loan means the platform is suited to investors with significant investable assets or institutions; IFISA and SIPP wrappers may be attractive for investors seeking tax-efficiency but do not alter investment risk.

Strengths: Direct FCA authorisation and specific P2P permissions provide regulatory oversight and governance requirements, including wind-down planning and regular outcomes and default disclosures. Platform disclosure of default statistics and published outcomes statements increases transparency for investors. Property-secured loans and typically conservative LTV targets can support recoveries where enforcement is required, reducing — but not eliminating — potential losses. No investor management fees and an established track record of paid interest may be attractive to income-seeking investors, subject to risk.

Risks and watch points: P2P lending is classified by the FCA as high risk; capital can be lost and investments are not covered by the Financial Services Compensation Scheme (FSCS). An increase in reported defaults or Expected Default Rates can occur because of reporting changes, economic conditions or loan vintage effects. Folk2Folk has historically reported very low investor capital losses, but outcomes reporting includes at least one quarter with £18,528 in capital losses — this confirms capital is at risk. The secondary market exists, but sales are not guaranteed and incur a £250 listing fee; impaired loans cannot be sold on the market, so early exit may be limited.

A Financial Ombudsman Service case (DRN-3991978) concerned a change to the platform's early redemption notice terms; the outcome found the platform's notice reasonable, which reduces systemic concern but illustrates practical investor impact risk. Capital loss reporting confirms that, while historically low, losses are possible and are realised only after recovery attempts fail. The distinction between loans "in default" and realised "capital loss" is important for investors to understand.