The guidelines lay out P2P platforms’ obligations to stay compliant with the regulations, particularly regarding the test platforms must make customers take to assess their appropriateness for investing in a P2P loan.
In this article, we’ll look at both the FCA rules and the new TISA guidelines to discover the steps P2P platforms should be taking.
A Look at the P2P Lending Industry
Total P2P consumer lending volume stood at £1.4 billion in 2017, compared to the £2 billion seen in P2P business lending.
This growth means more consumers are exposed to both the potential risks and rewards of P2P lending. While many P2P platforms advertise rates of return that are much higher than regular savings accounts, the risks are also much higher.
These risks were highlighted in the recent collapse of P2P lender Lendy. When the company went bust, it left investors with huge potential losses, up to 93p on the pound according to the Financial Times.
What Are the FCA Rules?
The FCA unveiled its new set of rules in June, and P2P lenders must put in place steps to ensure they are compliant by 9th December 2019.
The rules are designed to help protect investors who choose to use P2P services and ensure firms operate sustainably. The rules include stipulations that:
There are also new rules on the plans for how P2P companies will be wound down if they fail to meet requirements.
What do the TISA Guidelines Recommend?
The TISA guidelines make several recommendations to help P2P services adhere to the above guidelines. The guidelines were created by a working group made up of TISA members, including P2P platforms RateSetter and Goji. The guidelines clarify some of the points in the FCA report and explain how platforms can stay compliant. The guidelines cover the following:
About the guide, Jeffrey Mushens, TISA’s Technical Policy Director, said it will provide “much-needed clarity ahead of the introduction of new regulation.”
Reparo Finance Helps Brokers Deliver Business Loans
As regulations on P2P lenders looks set to intensify business lending may be affected; our friendly team offer an alternative source of funding and are happy to take your call.
Reparo Finance is an alternative provider of business loans. We provide asset-backed loans of up to £1 million to businesses that may have been overlooked by traditional lenders.
We are happy to take a look at a business’s circumstances and are not bound by restrictions that may exist at other lenders. Because of this, our service can be incredibly quick, with loans sometimes being approved and completed within a matter of days. If you are a business looking for a loan or a broker with a client who may be able to benefit from a service like Reparo, contact a member of our sales team on firstname.lastname@example.org or 0161 451 5710.