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Peer2Peer Finance News | September 20, 2017

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From regulation to securitisation, a year in the life of Peer2Peer Finance News

From regulation to securitisation, a year in the life of Peer2Peer Finance News
Marc Shoffman

It has been a busy and at times frantic first year at Peer2Peer Finance News. Here are some of the key moments of the past 12 months.

September 2016
Peer2Peer Finance News launched just a month after interest rates had been cut to record lows amid uncertainty following the shock Brexit vote.

The ultra-low rates were a new blow for savers already suffering with paltry returns, and P2P firms reported they were starting to benefit, with RateSetter reporting that accounts had doubled.

Meanwhile, Zopa took the world by surprise when it announced its first securitisation deal at the end of September. The £138m transaction represented the first ever securitisation of unsecured consumer loans in Europe. It was quickly oversubscribed, leading the platform to consider more issuances in the future.

October 2016
Lending Works became the first major P2P lender to gain full authorisation from the Financial Conduct Authority (FCA).

Meanwhile, Lord Adair Turner was the keynote speaker at the LendIt conference and Peer2Peer Finance News took the chance to get clarity on what the former regulator really thinks of the sector after he had previously warned that P2P lending “make the worst bankers look like absolute lending geniuses.”

After his keynote speech, Lord Turner spoke to P2PFN – and only P2PFN – at LendIt, in an exclusive interview that was picked up by City AM. He expressed concerns that the industry could mutate into more complex structures that would be “concerning” for the regulators.

November 2016
The structure of some of the UK’s most high profile P2P lenders came under the spotlight.

Zopa announced plans to launch a bank, while RateSetter said it would start reporting a “capital coverage ratio” on its website in a bid to reassure investors about the safeguards protecting their money.

The P2P lender said the move was in response to feedback that its provision fund is too “binary” and added that the changes should “build flexibility into the provision fund consistent with the interests of our investors”.

Peer2Peer Finance News also learnt that Wellesley had stopped offering longer-term loans to its investors; it has subsequently “paused” its P2P operations until later this year.

Meanwhile, the Bank Referral Scheme launched, with nine of the UK’s biggest banks agreeing to pass on the details of small businesses they have rejected for finance to three aggregator platforms – Funding Xchange, Business Finance Compared and Funding Options – that could refer business to alternative lenders such as P2P platforms.

December 2016
The FCA revealed its long-awaited interim feedback as part of a post-implementation review of regulation of the P2P sector.

Concerns were raised over provision funds and the ways platforms were marketed to consumers.

January 2017
The P2P sector was given a New Year boost with the government-backed British Business Bank pledging a further £40m for lending through Funding Circle.

It was a record-breaking month for P2P, with the Peer2Peer Finance Association (P2PFA) members breaking the £7bn barrier for cumulative lending, while Zopa announced it had been the first to reach £2bn of lending.

February 2017
The first Innovative Finance ISAs (IFISA) from more established P2P firms began to get released, starting with Lending Works, which saw an inflow of funds of more than £1m in 24 hours, followed by Landbay.

They joined firms such as Abundance and Crowdstacker who were already offering IFISAs.

Funding Circle also joined the £2bn club during the month.

In less positive news, the FCA wrote to platforms warning those engaging in wholesale lending may be breaching regulations and need to take action.

March 2017
Zopa showed how popular P2P had become by having to create a waiting list to cope with demand from investors on the platform.

As the end of the tax year approached, Abundance figures showed how popular the IFISA was, revealing £10m had been invested.

April 2017
There were plenty of shifts in strategy during April.

Funding Circle announced it was winding down its property lending to refocus entirely on its original small- and medium-sized enterprise (SME) target market. Meanwhile, a management review of P2P Global Investments was announced, as the P2P-focused fund looked to shift towards more asset-backed lending.

May 2017
Zopa became the first of the ‘big three’ platforms to gain full FCA approval, later joined by Funding Circle.

There was a big name hire over at RateSetter as asset management heavyweight Paul Manduca joined, while the Green Deal gained P2P funding on Abundance.

June 2017
It was an interesting month for dropping plans.

One of the early members of the P2PFA, LendInvest, announced it had cancelled its application for FCA authorisation.

DIY investing platform giant Hargreaves Lansdown also said it had dropped its plans to enter the P2P market.

Zopa’s IFISA was also launched during the month.

July 2017
A freedom of information request by Peer2Peer Finance News showed regulation has cost the sector up to £2m.

It was a mixed month news-wise for RateSetter.

It marked reaching the £2bn loans milestone, but later faced scrutiny after giving all its lenders an option to sell out of their investment free of charges, as part of “interventions” it has made on three former wholesale lending partners.

August 2017
There was plenty of change in August.

Funding Circle announced a re-brand and the end of manual lending on the platform and RateSetter departed the P2PFA amid transparency concerns over its approach to wholesale lending.

September 2017
We are barely halfway into the month but have already seen a high-profile departure, with Jane Dumeresque leaving Folk2Folk.

There has also been criticism of HMRC’s IFISA numbers, with Abundance and Crowdstacker both claiming to be the biggest players in the last tax year.

As you can see, there is barely a quiet month for P2P. With consumers looking for a decent home for their cash and the imminent release of the FCA’s full feedback from the post implementation review, stay tuned for plenty of busy times ahead!