Peer-to-peer consumer lending, or the alternative savings market, grew by 66 per cent last year and now stands to benefit from continuing low interest rates and new Isa respectability.

The Innovative Finance Isa will from April give saving with the likes of Zopa, Ratesetter, Funding Circle and Landbay the same tax advantages as cash and stocks and shares Isas.

The government stamp of approval, allowing the alternative sector to join the Isa brand, should encourage more people to take the P2P plunge. In the search for a decent return on savings, growing numbers are prepared to lend their cash to individuals and small businesses rather than use traditional savings accounts.

It comes at a time when the Bank of England has poured cold water on hopes of an interest rate rise anytime soon. Some forecasts have rates stuck for another three years, killing the idea that conventional savings products will start to offer better returns before long.

The UK Alternative Finance Industry Report published this week said: “The introduction of the Innovative Finance ISA could have substantial impact on the market, with peer-to-peer consumer lenders expecting around a 26per cent increase in total volume.”

It said a number of platforms had struck high-profile partnership deals with banks, helping to increase public awareness of the sector further as well as providing a high quality pool of borrowers with credit risk data.

The sector reached £909 million in 2015, compared with £547m in 2014 and has grown by an average 78 per cent a year since 2015 – though the rate slowed last year.

Christine Farnish, independent chair of the P2P Finance Association, said: “Today’s report shows ...... the growth in peer-to-peer consumer lending is challenging the traditional banks and building societies.”

Yorkshire Building Society warned last year that only 42per cent of consumers were familiar with the term peer-to-peer, and most people were unaware that they had no protection under the Financial Services Compensation Scheme.

Its survey found savers and investors targeting an annual return of 5.3 per cent on average, with some aiming for eight per cent , and warned that “one in two savers believe the new rules give them the licence to take more risks with their money”.

For those wanting easy (but not instant) access to their cash, rates of around 3.5 per cent are available, according to listings. You can choose whether you feel more comfortable lending to individuals (Ratesetter ), small businesses (Assetz), residential property (Landbay) or property developers (Wellesley). Each has a form of reserve or provision fund.

For locking up your savings between six months and three years, eight different providers are listed, ranging from 3.8per cent at Zopa, the original P2P platform now 11 years old, to seven per cent at Assetz where you are lending to renewable energy projects such as wind farms.

Four years-plus savings terms could earn you between five and seven per cent. Each platform is different and savers need to do their homework on the key issues of access to cash, fees, and security.

Funding Circle, for instance, has no provision fund, but is one of the fastest-growing platforms offering investors the choice of lending to different strata of risk-rated small businesses. Wellesley & Co has a £2m provision fund but is arguably lending into a riskier area of the market in property development.. Platforms will tend to charge you to exit early, and sometimes you may not be able to get out when you need to if loans cannot be sold on to other investors.

Opting for Lendinvest, which is launched into Scotland this week, could earn lenders Isa returns of over seven per cent for loans secured against property.

Independent analyst Andrew Hagger says it beats buy-to-let. "Peer-to-peer property lending opens up the chance to make a decent return from bricks and mortar to a much wider audience. It's not without risk, but neither is buy-to-let, and at least with P2P your interest rate and income level can be fixed from the outset, plus it comes without all the red tape and headaches associated with being a landlord.”

Only Zopa has been through the financial crash, and last week former regulatory chief Lord Adair Turner warned that a future credit crunch would expose risky P2P lending that would “make banks look like geniuses”.

But this was hotly disputed by Landbay, which secures all borrowing against residential property, and uses a professional survey for every property. Chief executive John Goodall says its processes and criteria are “in fact very similar to a traditional lender”.

Ms Farnish said Lord Turner’s comments “fly in the face of the evidence”, and since the industry began defaults on loans totalled between two and three per cent. “We only lend to creditworthy consumers and established SMEs."