There were over one hundred submissions for the RFI by the US Department of Treasury on Marketplace / Peer to Peer Lending. As one would expect, most commenters came with either an ax to grind or an urgent message to deliver. In reading many (not quite yet all) of the comment letters, one stood out as providing a superlative overview of the online lending industry in the United States.
Peter Renton, founder of Lend Academy and co-creator of LendIt (a very successful roving lending conference), delivered a missive that not only provides Treasury much needed guidance but a valuable perspective on this fast growing sector of finance.
Granted, Renton has a stake in this game. But as neither a platform operator nor adversary, his opinion takes a different path.
Renton notes the shortcomings of current regulation and the need to maintain a level playing field for all – including retail investors: A group that is at risk to being pushed to the sidelines by big money going forward.
He highlights the ABA for their thinly veiled hit piece attacking online lenders published earlier this year.
From definitions to risk- it is pretty much all here.
If you want to know his thoughts on a regulatory approach, Renton advocates on behalf of an already well-established regime – one that can provide guidance for US policy makers;
“We believe that the P2PFA/FCA [in the United Kingdom] solution is the best public- private regulatory approach to P2P lending in the world and we would support the implementation of a similar model in the US. ”
Renton nails it on the head when he highlights the imperative nature of encouraging innovation by avoiding myopic regulatory mire;
“The bottom line is this. The U.S. has always led the world in financial services. But lending money to consumer and small businesses is going through rapid changes right now and it is never going back to the way it was last century. For the U.S. to continue to lead the world of financial services in this century it needs a regulatory framework that will encourage innovation. Otherwise, countries like the United Kingdom and China will likely be the source of continued innovation.”
Now the only question remaining is will Treasury, and others, take this sage advice to heart? We certainly hope they do as they risk missing an important opportunity for the US economy.
Read the comment letter below.
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