P2PFA accused of reducing transparency after loanbook changes
THE PEER-TO-PEER Finance Association (P2PFA) has been accused of reducing transparency and hindering efforts to enhance investor protection after changing the rules governing how firms publish their loanbook.
Previously, members of the self-regulated trade body were obliged to publish their full loanbook, showing information about all the loans on their platform.
But at the start of June, the P2PFA announced that members now have the option to “either continue to publish their entire loan book, or provide a detailed breakdown of loans in their overall loan book to enable a consumer to be informed about the nature and number of loans of different descriptions presently originated through the platform according to standards to be approved by the P2PFA board.”
It claimed this would improve the accessibility of performance data published on member platform websites.
Read more: P2PFA member lending exceeds £8bn
Shortly after the changes were introduced, Funding Circle withdrew its downloadable loanbook and stopped publishing loan performance on a daily basis. The peer-to-peer business lender has launched a new statistics page which will be updated every three months.
Stuart Lunn (pictured), chief executive and co-founder of LendingCrowd, which is not a P2PFA member, said investors “deserve better treatment, especially at a time when the Financial Conduct Authority (FCA) is preparing a new consultation on P2P regulation”.
He pointed out that the FCA is seeking to further strengthen protection for investors, having already raised concerns about the difficulties they face when comparing platforms or assessing risks and returns.
“The P2P sector often likes to boast that it cuts out the middleman by connecting individual investors with business borrowers,” Lunn wrote in a blog post. “By enabling people to ‘be the bank’ and lend directly to Britain’s vital community of small businesses, it would be step backwards for P2P platforms to then add a layer of opaqueness to the system.”
He added that LendingCrowd is “firmly opposed to any reduction in transparency” and will continue to update its loanbook each day, making it freely available to everyone who signs up to the platform.
Robert Pettigrew, director of the P2PFA, said the revision to the principles will ensure that disclosures are meaningful and accessible for investors.
“The loanbooks of the largest platforms are of such a magnitude that their continued accessibility for a large number of investors is of questionable value,” he added.