It looks like we're not out of the woods yet in terms of P2P problems in China. According to an article on qq.com's tech portal, P2P illegal fundraising grew eleven-fold from 2013-2014 and is on-track to exceed that in 2015.
In terms of risks to consumers, one could argue that the Shanghai stock market and P2P lending are some of the riskiest investments that one could make at this point.
The stock market has defied even the most positive of expectations and has companies reporting awful results, yet their stocks still climb. With tens of stocks trading at over 100 times forward earnings, it seems like a bubble, but the real risk is a bit unclear. We could be at 6000 or we could be at 2000 in 6 months.
Similarly, P2P lending is nearly as unpredictable, but the risk is somewhat more clear upfront. Credit rating and scoring is surprisingly nascent in China as we have discussed before and that makes it even more difficult to identify and measure credit quality on P2P platforms. In theory, a smart investor could do their own research on the person and company behind the loan, but in practice, this is rare to happen - the majority of people will not do more than what's already on the platform. P2P platforms are especially dangerous in China where herd-investing is often the norm.
The government will need to move soon and we believe we could be seeing P2P regulation promulgated by Q3-2015 if not sooner.