What will the new cabinet do for P2P?
ALONG with a new prime minister, we have a new set of cabinet ministers, all of whom will be keen to make their mark on the country and its vast financial services sector.
But how will their new roles affect the peer-to-peer lending community?
P2P lending and crowdfunding were championed by George Osborne, who introduced the Innovative Finance ISA (IFISA) and incentives like the Bank Referral Scheme. However, that was two chancellors ago, and since then we have had the hawkish policies of Philip Hammond, and now the newly-minted Chancellor Sajid Javid in charge of the nation’s coffers.
Javid is a former City executive, who spent 18 years working his way up the finance ladder until he became managing director at Deutsche Bank. Since he moved into politics in 2009, he has had a series of Treasury roles and positions of interest to the lending community.
As Secretary of State for Housing, Communities, and Local Government, he clamped down on property developers, threatening to remove planning permissions if construction targets are not hit, in an effort to accelerate the UK’s house building targets. At the time, Stuart Law, chief executive of Assetz Capital described this as “exactly the sort of noises we need to hear coming from government if we are to address the housing crisis.”
Javid has yet to comment on his views towards the P2P sector, but there are some signs that he is keeping a close eye on the fintech community at large. In his first week as chancellor, Javid signed off on a plan to stop economic crime, including the mis-selling of crypto assets.
However, his main focus this year is likely to be on Brexit. Upon receiving his cabinet appointment, he pledged to create “significant extra funding” to get Britain ready to leave with or without a deal. Whether or not this funding detracts from house building projects and fintech investment remains to be seen.
The business secretary
As new Secretary of State for Business, Energy and Industrial Strategy, Andrea Leadsom is likely to have a huge impact on the future of small- and medium-sized enterprises (SMEs) in the UK. We know that many SMEs have delayed funding rounds due to Brexit confusion, and Leadsom’s pro-Leave stance suggests that she has a plan to protect SME growth in the event of a no-deal.
She has been a vocal supporter of P2P and alternative lending in the past, and played a role in the discussions which lead to the Innovative Finance ISA launch. As another City veteran, Leadsom understands how financial markets work, and this may result in additional support for up-and-coming sectors, as well as Brexit-friendly legislation.
The chief secretary to the Treasury
First-time cabinet member Rishi Sunak now has the third-most senior role at the Treasury, and will likely be responsible for most non-Brexit financial decisions. In 2017, he authored a paper calling for more funding opportunities for UK SMEs, and praised P2P lenders for their role in providing access to funding.
Furthermore, he is the son-in-law of the celebrated Indian IT billionaire and fintech investor Narayana Murthy, so it is safe to assume that he has at least a basic understanding of the huge potential of the alternative finance community.
The prime minister
Unlike many of his cabinet appointees, the new PM does not have a background in finance. However, he does have one hugely important task as the country’s new leader: delivering Brexit.
As the figurehead for the Leave campaign, Johnson has been advocating for a possible no-deal Brexit since 2016, and in his first few days at Downing Street, he has doubled down on his no-deal rhetoric.
Brexit will undoubtedly be the defining policy of his premiership, and multiple alternative lenders have expressed concern at the prospect of a no-deal exit. Despite the expertise of his cabinet, it will be Johnson’s policies that will ultimately shape the state of the country’s growing P2P sector.