Andrew Tyrie, chairman of the Treasury Committee, has written to Tracey McDermott, chief executive of the Financial Conduct Authority, and Andrew Bailey, deputy governor of the Bank of England for Prudential Regulation, about whether consumers would benefit from further regulation of the peer-to-peer lending market.

Commenting on the correspondence, Tyrie says: “The Committee is concerned to ensure that the FCA is paying due attention to the risks - and the opportunities - afforded by the growth of peer-to-peer lending and related markets. With this is mind, I have written today to Tracey McDermott to ask for an explanation of FCA policy."

Noting the growth in P2P loans, Tyrie says that Government cheerleading of the sector through measures such as the inclusion of P2P investments in ISA allowances, represents a form of official support for a market that may be inherently higher risk.

“Whether and, if so, to what extent investors would benefit from stronger consumer protection now needs careful thought," says Tyrie. "Poorly informed investors may be left with a false sense of security about the balance of risks versus returns."

Stressing that greater regulation is not necessarily the answer, Tyrie wants assurance that rule-making bodies have struck the right balance between the risks posed and the opportunities presented.

“The prudential impact of the financial sector’s increasing exposure to unsecured loans through crowdfunding platforms also warrants closer scrutiny," he adds. "The sector’s ability to see through an orderly decline should be considered sooner rather than later.”