Fraud is the biggest risk for China's flourishing peer-to-peer online lending business, senior financial executives warned on Thursday.

Gregory D. Gibb, chief executive of Shanghai Lujiazui International Financial Asset Exchange, said the top priority for the online lending business is to protect users' interests as almost all lenders on China's P2P platforms are individual investors.

"Investors in the P2P lending business in developed countries such as the United States are mostly professional institutional investors, which is different from the reality in China," he said.

He made the comments at a panel discussion at the Boao Forum in southern China's Hainan province. Gibb's company, better known as Lufax.com in China, is a leading P2P lending firm owned by Chinese insurance giant Ping An Insurance Group.

Industry experts have called to establish a credit verification system to facilitate a secure and healthy development of the country's online lending business.

Some analysts estimate that there are more than 2,000 P2P companies managing more than 300 billion yuan ($48.4 billion) in China. But the country's financial regulator has not issued any official rules to regulate the booming sector.

Zhu Yunlai, former chief executive of investment bank China International Capital Corp, questioned how much it costs for P2P companies to verify online borrowers' information.

"The verification cost can be very high for small P2P companies. And even if the information is authentic, you are not sure whether the information is valuable to determine a person's credibility," Zhu said.

The average interest rate for P2P loans in China has exceeded 10 percent, indicating potentially higher risks in the business, analysts have said.

Gibb said that the key concept of the P2P lending business is diversification of risks, noting that third-party credit insurance companies should also be encouraged to participate in the business.