The Financial Conduct Authority (FCA) began regulating the peer-to-peer or platform lending industry in 2014. They announced at the time that they would open a ‘post-implementation’ review in 2016 to assess how the regulations were working alongside developments and innovation in the sector. After conducting their review, in June they announced new regulations for the industry.
At Funding Circle we’ve always welcomed regulation and have worked with the FCA and industry associations to raise standards across the sector. Our teams have been working behind the scenes to make sure the required changes are ready in time. Below you can read more about some of the changes we have made and how they will affect you.
Extra steps for new investors
New investors on lending platforms now need to take an ‘appropriateness assessment’. This will help to ensure customers understand how the platform that they are signing up to works, the risks involved in investing on that platform, and the nature of the investment the platform offers. At Funding Circle, this takes the form of an Investor Quiz that you can take within your account.
Separately, investors will be asked to identify themselves as an everyday, sophisticated or high net worth investor. Investors who classify themselves as an everyday investor can only lend up to 10% of their investable assets in their first year using a lending platform. After a year, investors can choose to change their classification to sophisticated investor, at which point they can increase their lending beyond this 10% limit. This is aimed at helping investors develop their understanding of the product with a limited investment and is a requirement under the new FCA rules.
How will this affect you?
If you joined the platform more than 12 months ago, you don’t need to take any immediate action. You can continue to lend to businesses as normal through your account and we may request that you select your investor profile when you next log in.
Depending on how long you’ve been investing with Funding Circle, we may also ask you to complete the Investor Quiz before you can add any more funds to your account. Simply log in to your account and follow the link from your Summary page. Your existing loans and all other features of your account will continue as normal.
If you have any questions, please get in touch with Investor Support team at firstname.lastname@example.org.
Remember, by lending to businesses your capital is at risk. Funding Circle is not covered by the Financial Services Compensation Scheme.
The Funding Circle team