Following the FCA publishing an interim report on crowdfunding regulations, the team at peer-to-peer lending platform Zopa revealed their thoughts about the report and its findings. As previously reported, the report took into consideration feedback from the leading UK crowdfunding platforms (including peer to peer lenders), associations, legal service providers and other interested parties. It is the second interim statement since initial rules were published in 2014.
“Earlier today, the FCA published interim feedback on its post-implementation review of the loan-based crowdfunding (that’s what we do) and equity-based crowdfunding market.The feedback is that it plans to consult on some of the rules governing our sector, to ensure that investor protection is appropriate while continuing to promote effective competition. We believe that an effectively regulated peer-to-peer lending industry is the best way to help us reach more customers, treat them fairly and help them build richer lives. Zopa has lobbied hard for our sector to be regulated, and we look forward to working with them through the consultation process to ensure regulation is fair and appropriate for consumers.”
Gillian Roche-Saunders, a partner at the law firm of Bates, Wells & Braithwaite in London, also responded to the FCA report and noted the organization has become “more cautious” with more complex operating structures of platforms. She explained:
“Simpler platform models are being favoured because the risks are more easily understood by consumers. The conflicts are more easily managed by firms, and they are easier for the FCA to supervise. It is the simpler models of platforms that are being authorised first and the FCA’s paper shows that its concerns about whether the more sophisticated structures are morphing into banks and asset managers remain.”
Roche-Saunders then noted:
“The industry needs scalable models and consumers want differentiators. The FCA needs to find ways to enable more complexity with disclosures, standards and smarter oversight tools, so that lenders and borrowers can continue to benefit from innovation.”
The interim report is another step in a consultation, which will reportedly be published in 2017. Any additional rules will go into effect in 2018.