Regulator announces peer-to-peer lending rules

Yesterday the Financial Conduct Authority published the final rules for peer-to-peer lending. This will formally kick in on 1st April and follows a consultation over the last four months to ensure proportionate regulation to protect both investors and borrowers, whilst also enabling the industry to continue to flourish.

Funding Circle has been lobbying for regulation alongside other members of the Peer-to-Peer Finance Association for a couple of years now, as we felt it was very important for our customers to be properly protected.

As James Meekings, one of our co-founders said yesterday in response to the news: “Peer-to-peer lending is now a £1 billion industry and it is predicted to grow to over £12 billion per year within the next decade. Funding Circle alone is currently facilitating £20 million of loans every month so it’s only right that a industry of this size becomes regulated, giving consumers even more confidence that peer-to-peer lending is here to stay.”

The introduction of proportionate regulation is a step-change for the peer-to-peer lending industry and we believe it will cement our position within the wider financial landscape.

Take a look at James responding to the news on BBC Breakfast here. If you have any questions about the new rules, you can always get in touch with us and other community members on our forum.

Natasha

Head of Corporate Communications

 

4 thoughts on “Regulator announces peer-to-peer lending rules

  1. In a nutshell just what do these new/proposed peer to peer regulations mean to us investors? Do they give us more protection? Will it affect the way we invest? Are there any downsides to these regulations?

  2. Will they allow basic rate tax to be deducted at source from interest accumulated, so we no longer have to fill out a tax return?

  3. In other words – they are not interested but I assume they will still want the tax from any gains.
    Publishing such a blurred and almost unreadable document as this is not good. Most PDF documents ex[and to fit the screen, but this one is rubbish on my screen. I cannot increase the size to more than 80%, which gives a size 6 font, and anything over this slides behind the vertical scroll bar. I am using Acrobat professional, which does not usually open a document in such a restricted way.

    Do it better or not at all.
    Howard Walker

  4. Hi all,

    From 1st April 2014 Funding Circle and all other peer-to-peer lending platforms will be subject to Financial Conduct Authority (FCA) regulation – under ‘loan-based crowdfunding’. A transitional period will be introduced for certain rules, to allow firms with an interim permission until 1st October 2014 to adjust their processes to meet the standards required. This is a positive step that Funding Circle welcomes, to maintain industry-wide high standards. We’re pulling together an FAQ page to launch next week, but in the meantime, here’s a brief description of how the rules impact you.

    Luckily, Funding Circle already complies with most of the regulation so there won’t be too many changes!

    The regulation will impact investors in the following areas:

    · Peer-to-peer lending platforms will be required to have arrangements in place to continue to return available funds and administer existing loans in the event that the platform fails. In practice, this means that if a platform does fail all of your existing loans will be unaffected and you will continue to receive repayments and any available funds will also be returned to you. This is something Funding Circle has had in place since the beginning.

    · All peer-to-peer lending platforms will be required to hold capital reserves (extra cash) to help mitigate any business and financial risks. Again, this is something we have always done.

    · Every platform must have a complaints procedure in place (you’ll find ours in the FAQs). If necessary, investors will be able to escalate their complaints to the Financial Ombudsman Service.

    · The FCA has also issued guidelines on the information that a peer-to-peer lending platform should provide to investors. We will provide more details on this next week.

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