Peer assessments assume that the student has sufficient knowledge to judge whether the work is worthy of pass or failure. If the student has that level of knowledge then s/he should be the teacher.
The practice should be banned.
There is also enormous pressure to pass all students even at post-secondary level. I was once told I could not fail a student because she was the daughter of a Malaysian prince and the university in question feared a diplomatic incident if she was failed. I failed her anyway and her father accepted the result when he spoke to me. (Yes, I was contacted and questioned!)
There is also pressure to pass students from minority groupings whether they have reached the standard or not. It makes a mockery of standards. Equal opportunity legislation is sometimes (ab)used to get pass results - and the fear of negative publicity is rife.
This often makes it even harder for students who are struggling with a course - sometimes a course they should not have attempted in the first place. Standards in one university I attended and worked in were so low that the students in their third year of biology could not have passed a British "A" level in biology - and there are plenty of complaints about the standards in the UK!