What is the appropriateness test and why it matters

What is the Appropriateness Test?

Before you can invest through a peer-to-peer (P2P) lending platform like FOLK2FOLK, you’re required by the Financial Conduct Authority (FCA) to complete an Appropriateness Test. This short multiple-choice assessment helps confirm that you understand the risks involved with peer-to-peer lending.

Why it matters

FOLK2FOLK provides fixed-rate investments secured against land and property. But like all investments, they carry risks and those risks may not be obvious if you’re used to savings accounts or other lower-risk products.

The Appropriateness Test helps ensure:

• You understand the nature of P2P lending
• You’re aware of the risks and how they differ from other types of regulated savings or bank investments
• You can make informed investment decisions

Why does it matter?

The FCA introduced the Appropriateness Test as part of its consumer protection framework. It’s a way to help ensure:

• You have a fair chance to assess whether this type of investment is suitable for your financial goals and risk appetite
• You’re not taking on more risk than you’re prepared for
• You’re making informed decisions based on understanding, not assumptions

What does it involve?

The test is made up of a few multiple-choice questions covering areas such as:

• The nature of P2P lending and FOLK2FOLK’s role
• The risks associated with these types of investments
• Your ability to access your money
• No FSCS (Financial Services Compensation Scheme) cover
• FOLK2FOLK’s back-up service provider in the event of wind down
• The risk of IFISA and non-IFISA investing is exactly the same

You’ll need to answer all questions correctly in order to pass.

You cannot see or select investment opportunities until you have passed the Appropriateness Test.

What do I need to know?

There are key risks you need to understand before you take the Appropriateness Test. Read our Guide to the Appropriateness Test.