Financial technology — commonly known as fintech — is radically changing the way consumers operate and is threatening the traditional banking industry.

One of the biggest growth areas is peer-to-peer (P2P) lending, which is when individuals lend and borrow money without having to go through traditional financial firms like the banks.

But according to Adair Turner, the former Chairman of the Financial Services Authority, which was abolished in 2013 to make way for the Financial Conduct Authority, consumers are taking huge risks when lending and borrowing via P2P services and the future fallout could be terrible.

"The losses which will emerge from peer-to-peer lending over the next five to 10 years will make the bankers look like lending geniuses," said Turner to BBC Radio's Wake Up To Money programme.

Today, Britain's Home Secretary Theresa May launched a new taskforce to combat fraud across the UK. Government figures show that five million frauds occur every year in England and Wales.

Britain's FCA is in the process of regulating the P2P sector after the industry exploded in popularity after the post-crisis stagnation of interest rates (people who lend money over the platforms typical get rates of 8% or more, compared to the Bank of England's 0.5% rate.)

Business Insider reported in October that many in the sector are expecting a big clearout of smaller platforms which can't face the cost or weight of regulation.

Ex-Chairman of Britain's now defunct Financial Services Authority, Adair Turner. Reuters It looks like that is already happening — financial regulation consultancy Bovill says 26% 0f platforms that have applied for authorisation have already abandoned the process, industry website AltFi reports.

The FCA received 114 applications and 30 were withdrawn, as of October 2015, with 26 of those "partial withdrawals", meaning a company is just giving up peer-to-peer activity but will continue whatever else financial services it offers.

Christian Faes, co-founder & CEO of the UK P2P short term mortgage lender LendInvest, sent a statement to Business Insider this morning in response to Turner's comment and said that you can't "trust" what he says.

"I don't think we can trust the person who presided over the worst financial meltdown in history to tell us who are or aren't lending geniuses," said Faes.

"His comments also do the FCA a disservice. Having just returned from meeting P2P companies in China, I've seen the real P2P wild west in action. The FCA is doing the right thing by regulating our industry. It might cause a shakeout, but this is a good thing and will leave the lenders that remain stronger, more confident and more credible.

"These comments are self-serving and timed to drum up more sales of Lord Turner's book on Amazon. Surely he is conflicted too, given that he's now regulator-turned-banker himself."

In January this year, Richard Lumb, the CEO of Accenture’s financial services business told Business Insider on the sidelines of the World Economic Forum in Davos, Switzerland that the banking industry is the switching from complacency to collaboration when it comes to fintech.

"Collaboration is the only way forward. Both segments need each other," said Lumb.

"Fintech doesn't necessarily want to be regulated like a traditional financial and banks don't want to disintermediate their customers. A lot of this new technology and the companies that built them are still in their infancy so banks can help smaller companies in building a business too."

Meanwhile, huge losses from P2P lending is a reality abroad.

Earlier this month, Chinese authorities arrested 21 people involved with the country's largest peer-to-peer lending service, Ezubao, which is accused of conducting a Ponzi scheme.

Peer-to-peer lending in China is like the Wild West right now. Most of the malpractice happens on a small scale at the bottom of the market, which partly explains why it has failed to generate big headlines.

Despite the huge number of platforms going bust there are still an estimated 2,000 online lenders in China, with just 50 representing about half of the market. And online lending remains a tiny fraction of China's financial services overall.