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Peer2Peer Finance News | August 18, 2019

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FCA approval is no longer a three-horse race

FCA approval is no longer a three-horse race
Anna Brunetti

AFTER an arduous 18-month process, Zopa became the first of the ‘big three’ peer-to-peer platforms to gain full approval from the Financial Conduct Authority (FCA) on Thursday, paving the way for the launch of its Innovative Finance ISA (IFISA).

The long-awaited regulatory green light is good news for the world’s oldest P2P lending platform and for the industry as a whole, but the two other ‘big three’ players would be forgiven for slight pangs of disappointment.

Several industry sources had strongly expected that Zopa, RateSetter and Funding Circle would get FCA authorisation on the very same day, arguing that the regulator would be wary of creating stark competitive advantages in the market.

While authorising smaller players at different times would not necessarily affect the competition ground, such a move with one of the three biggest platforms would have a clear impact on the market, according to one head of fintech services at a global law firm.

“The regulators would be mindful of competitive repercussions,” he said.

However, RateSetter and Funding Circle are not thought to be on the cusp of making concurrent announcements and the FCA will not be hurried by criticism of creating competition imbalances.

Peer2Peer Finance News understands that the regulator is refusing to speed up its processes in order to maintain a level playing field and is continuing to assess all firms on a case-by-case basis.

Funding Circle said it continues to work with the City watchdog and looks to keep its clients informed of the next step.

“We recognise the importance of a strong and robust regulatory framework and look forward to notifying customers when we receive full authorisation,” a spokesperson said.

A RateSetter spokesperson said the firm is continuing to work closely with the FCA “and is at advanced stages of the process.”

Both platforms welcomed the news of Zopa’s authorisation and agreed that it shed a positive light on the whole sector, which now stands to gain further momentum.

Read more: FCA writes to P2P platforms to take action over wholesale lending

However, one of the two platforms pointed out that FCA authorisation would not be a huge game changer for its business growth, especially with ISA season having just passed by.

But other platforms have told Peer2Peer Finance News that they were starting to get nervous about losing their head start in the sector due to regulatory delays.

“There is definitely a concern the process is creating a competitive disadvantage, with more established firms losing their first-mover status [because of] licences being given to newer players, and I don’t see the justice in that process at all,” one chief executive said.

Read more: Here’s what the P2P sector thought of the FCA feedback