FCA unveils plans to improve disclosure and tackle risk in P2P sector
PEER-TO-PEER lenders are facing beefed up rules on disclosure and wind-down plans as well as restrictions on who they can market their products to.
The Financial Conduct Authority (FCA) has released a new consultation in its long-awaited response to a post-implementation review of the P2P sector that was first launched in July 2016.
The 156-page document outlines concern on levels of disclosure, levels of risk and how much investors understand what would happen were a platform to fail.
Under the proposal rules, platforms would be restricted to marketing to those who are certified or self-certify as sophisticated investors, those who are certified as high-net-worth investors, those who confirm before a promotion is made that, in relation to the investment promoted, they will receive regulated investment advice or investment management services from an authorised person, or those who certify that they will not invest more than 10 per cent of their net investible portfolio in P2P agreements.
The FCA is also proposing that platforms keep a resolution manual with information about their operations that would assist in resolving the platform in the event of its insolvency.
The City watchdog has stopped short of banning provision funds but says it should be made clearer how they work and that they may not be enforceable.
If they are enforceable, the FCA has proposed that platforms consider offering insurance instead.
There are also proposals that could see all platforms have to make their loanbook public and keep it updated.
The FCA is proposing that investors have access to disclosures “in good time” before they invest so they can compare investment opportunities across platforms.
It puts forward different rules depending on if a platform lets a lender choose their loans or builds a portfolio on their behalf.
The consultation also proposes extending mortgage finance regulations to P2P property lenders.
The FCA is asking for responses to this consultation by 27 October 2018 before publishing rules in a policy statement later this year.
Read more: Feature: Playing by the rules
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