IHE CITY watchdog has beefed up its scrutiny of the peer-to-peer lending sector in the wake of the Lendy collapse. The Financial Conduct Authority (FCA) has faced criticism over its supervision of Lendy, having authorised the P2P property development lender just 10 months before it went into administration with a mountain of defaulted loans. Industry insiders have noted a change in the FCA’s attitude in recent months as its reputation has been hit by the Lendy scandal as well as the fallout over the collapse of P2P lender Collateral and minibond provider London Capital & Finance. Some experts think the regulatory tightening may deter some new entrants.
If you are a P2P lender moving from appointed representative to full authorisation or new to the market or existing, we are seeing increased scrutiny. The FCA doesn’t want to stifle innovation but it has a duty to ensure customers understand what they are investing in. With the new regulations set out in the June policy statement, there is a higher bar that needs to be achieved in terms of ongoing compliance. There may be some unintended consequences as it could deter new entrants but the industry is agreed that a tougher stance is broadly positive.
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