FCA’s new proposals for peer-to-peer (P2P) lending platforms are a ‘positive step’ according to Zopa’s CEO.
In a blog post on its website, Jaidev Janardana said the P2P lending business welcomed the new proposals and will play and important role in continuing the growth of the sector.
“We always try to put customers at the heart of our business and so we strive to make sure our customers understand the risks of P2P, Janardana said.
“We do this by being clear on what customers can expect every step of the way. We also believe strongly in a well regulated industry – we lobbied for years for effective regulation. We’re also a founder member of the P2P Finance Association (P2PFA) and are fully signed up and on board with the association’s operating principles, designed to give a high standard of disclosure to customers.”
Last week, The Financial Conduct Authority proposed a number of changes for loan-based crowdfunding platforms due to ‘growing complexity and poor practices’ since it first authorised trading in the market 18 months ago.
Its changes are designed to address the ways in which the loan-based crowdfunding model has developed since the FCA last reviewed the sector in December 2016. After observing the variety of loan-based crowdfunding business models, some of which have become increasingly complex.
Janardana added, “The P2P investment options out there are pretty broad. This makes it very important that companies are up front about the risks involved. They think more regulation will drive the industry to be more transparent and better protect the customer.”
Its new rules include proposals to ensure investors receive ‘clear and accurate information’ about a potential investment and understand the risks involved. The FCA has also laid out proposals to extend existing marketing restrictions for investment-based crowdfunding platforms to loan-based platforms, along with ensuring investors are ‘adequately remunerated’ for the risk they are taking, among others.
Zopa said it will now work with the regulator as they establish the right standards for customer’s P2P investments. The FCA will bring out some new rules for the industry following a consultation period, which ends on 27 October 2018.
Copyright © 2018 RegTech Analyst
Copyright © 2018 RegTech Analyst
