RELENDEX has become the latest peer-to-peer lender to receive full authorisation from the Financial Conduct Authority (FCA), after altering its business model.
Michael Lynn, founder of Relendex, which provides bridging and development finance loans between £100,000 and £2m, said full authorisation would give lenders and borrowers more confidence.
Lynn told Peer-to-Peer Finance News that Relendex has been altering the way its loans are structured since last summer, when the regulator flagged concerns about the platform lending to another lending company.
The FCA confirmed its position on wholesale lending last month, warning P2P platforms that they could be breaching regulatory requirements by engaging in the practice.
“For a P2P platform to be compliant the FCA says one side needs to be retail,” Lynn said.
“Previously we were putting lender money into an intermediary lending company. The regulator’s thinking was that if a platform goes under, an administrator needs to be able to see all parties in the loan to assess if it can continue. I think other platforms are having a similar issue.
“I can understand the FCA’s point of view. If they want the sector to grow it has to be battle ready.”
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A number of P2P platforms have had wholesale lending operations in the past, including ‘big three’ lender RateSetter, which started winding down that part of its business last December. The firm said last week that it is in close contact with the FCA as it transitions to new arrangements with its existing wholesale partners, “which may take a few months to conclude”.
MoneyThing has also revealed that it had to tweak its business model to gain FCA approval, although this was not related to wholesale lending.
Lynn said Relendex has a loan book of £10m that he hopes will grow due to the platform receiving full authorisation and the launch of an Innovative Finance ISA in the next tax year.
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