The UK’s financial regulator, the Financial Conduct Authority (FCA), today announced new rules for peer-to-peer (P2P) lending platforms.
Christopher Woolard, executive director of strategy and competition at the FCA, said: “These changes are about enhancing protection for investors while allowing them to take up innovative investment opportunities. For P2P to continue to evolve sustainably, it is vital that investors receive the right level of protection.”
LendingCrowd, which has been fully authorised by the FCA since November 2016, supports these aims. The FCA’s new rules, which come into effect in December, will mean that investors who are new to the sector will not be able to invest more than 10% of their net investible assets in P2P agreements.
The P2P market has evolved rapidly since the first platform launched in 2005. In the UK, the sector has been overseen by the FCA since April 2014, when it took over the regulation of consumer credit from the former Office of Fair Trading. The FCA has already introduced clear rules aimed at safeguarding investors. For example, client money must be protected and platforms have to meet minimum capital standards. Resolution plans must also be in place to ensure that, if a platform collapsed, loan repayments would continue to be collected for investors.
Stuart Lunn, founder and CEO of LendingCrowd, said: “We are supportive of proposals to enhance investor protection. In anticipation of these outcomes we have already been working on making the necessary changes to our platform. Diversification is key to managing risk across an investment portfolio, so having no more than 10% in one asset class should not be seen as an onerous restriction.
“LendingCrowd is a responsible lender that has been built on a culture of protecting clients, both borrowers and investors, and we have been at the forefront of our industry when it comes to regulation. Platforms that have this underpinning should not be afraid of an appropriate level of oversight under an evolving regulatory landscape.”
Please remember that your capital is at risk when lending to businesses. LendingCrowd and its products are not covered by the Financial Services Compensation Scheme.