US PRESIDENT Donald Trump’s plans to deregulate financial services are no threat to peer-to-peer lenders, Funding Circle’s global co-head of capital markets has said.
“Trump has been quite open about his plans for deregulation, but I think that’s more with regard to investment banks,” said Sachin Patel (pictured) at a media roundtable held by the Association of Investment Companies.
“However, if he does deregulate retail financial services, that’s not the only way we compete with banks. It’s not just regulatory capital considerations, we can offer other advantages such as speed of transactions.”
Funding Circle is headquartered in London and is the third-largest lender to small businesses in the UK. However, it is one of the only P2P platforms to have expanded internationally and now operates in the US, as well as Germany, Spain and the Netherlands.
Patel added that Funding Circle’s risk team was monitoring signals around the time of the EU referendum vote and Trump’s election, to assess any stress in the economy. “We haven’t seen any signs of stress yet; there’s no reason to tighten the credit box,” he said.
Funding Circle, like most major P2P platforms, is still awaiting regulatory authorisation so that it can launch its Innovative Finance ISA (IFISA). However, its London-listed fund – the Funding Circle SME Income Fund – means that its loans are already accessible to individuals investing in a self-invested personal pension (SIPP) or an ISA.
Patel said he was not concerned that the launch of the IFISA would take investors away from the fund.
“I think they will be very complimentary products,” he said. “I think there will be people who want to invest just in the UK via the IFISA, but others who want to invest in loans from the US and Germany through the fund. We’re growing so much, there’s plenty of room for both and I think they will grow in tandem.”