P2P wholesale ban boosts business for wider crowdfunding sector
THE FINANCIAL CONDUCT AUTHORITY (FCA)’s clampdown on peer-to-peer wholesale lending activities is pushing lenders towards other types of crowdfunding platforms to obtain finance.
P2P platforms have had to stop lending to other lenders after the City watchdog confirmed its position on the practice earlier this year, warning that it could be in breach of the rules.
“The recent changes in the P2P sector effectively pushed that type of company to the crowdfunding space,” said Andrew Adcock, chief marketing officer at Crowd for Angels.
The bond- and equity-based lending platform has recently launched a fundraising for The Asset Exchange, an asset-backed lender operating in the car finance market.
The borrower is seeking to raise £250,000 through the platform through a crowd bond secured against the company’s assets, returning about 12 per cent to investors. It has already raised over £58,000 from 26 investors and the offer is expected to close on 23 July.
“The new P2P restrictions are one of the reasons companies like The Asset Exchange are now using our platform,” said Adcock.
Several P2P platforms such as RateSetter and Lendy are in the process of tweaking different aspects of their business, from re-arranging wholesale lending activities to stepping up reporting and modernising default policies, as the City watchdog continues to examine the sector to potentially streamline requirements.