RateSetter chief welcomes 10 per cent investor limit

RATESETTER’S chief executive Rhydian Lewis (pictured) has welcomed incoming rules that limit everyday investors to putting no more than 10 per cent of their portfolio into peer-to-peer loans.

The new Financial Conduct Authority (FCA) regulations bring P2P lending into line with other mainstream savings and investment choices, Lewis said in an article on business networking site LinkedIn.

P2P lending is now a “logical component” of any investment portfolio, Lewis said. He suggested that in time the 10 per cent limit may be considered a target for investors.

“The 10 per cent is described as a limit but it could also become a target: in time, why wouldn’t everyone have 10 per cent of their money in our asset class?”, Lewis said.

Read more: Here’s what the industry thinks of the FCA rule changes

“The FCA has also validated our mission of making this asset class available to everyone – great news for anyone looking to have their money work harder for them and a welcome boost for financial inclusion.

“Previously the returns from loans were gobbled up banks; now investors can access them as well.”

The new rules, which come into effect on 9 December 2019, are the result of a lengthy post-implementation review of the sector carried out by the City watchdog.

Platforms will soon be restricted to marketing to sophisticated and high-net-worth investors, people receiving regulated investment advice, or those who certify that they will not invest more than 10 per cent of their portfolio in P2P.

The tighter regulation will “drive out the cowboys and the Wild West perception of P2P lending will give way to a well-regulated sector in which people can have confidence,” Lewis said.

P2P regulation has come under the spotlight in recent months, due to the collapse of property platform Lendy and an FCA warning on “high risk” Innovative Finance ISAs.

Read more: P2P industry readies for investor marketing restrictions