PEER-TO-PEER investors back the regulatory changes coming to the sector, according to a market survey from Growth Street.
55 per cent of 356 investors surveyed by the P2P business lender said they believe the Financial Conduct Authority’s (FCA) incoming rules will increase the long-term sustainability of the industry, while 25 per cent said the changes will have no effect at all.
The City watchdog in June announced its long-awaited, updated rules for the P2P lending sector, which confirm the introduction of investor marketing restrictions.
Under the new rules, platforms will need to introduce an appropriateness test and retail investors will need to pledge to put no more than 10 per cent of their net portfolio into P2P loans. The new rules will come into effect in December.
Unusually for a P2P platform, Growth Street already has an appropriateness test in place but said it will be revising it in the coming months to ensure full compliance with the new regulations.
It said it will also strengthen its requirements for retail investors to comply with the so-called 10 per cent rule and will put in place monitoring to alert investors who may have inadvertently exceeded it.
“The results of this survey seem to match our general feeling that the new FCA rules will not impede our ability to attract ordinary investors,” said Greg Carter, Growth Street’s chief executive.
“Growth Street differs from most P2P platforms by having incorporated many measures similar to the new regulations since we opened to retail investors in 2016.
“Tighter controls to protect investors, greater education and increased transparency are critical if P2P lending is to strengthen its credibility among investors.
“Ultimately, the regulators play an important role by protecting the interests of investors, while ensuring that the industry continues to act responsibly and grow sustainably.”
Carter went on to say that the £1,000 threshold in tandem with the 10 per cent rule works well to ensure that any customer investing can genuinely afford to invest.
“Any experienced investor or financial adviser will say that no more than 10 per cent of anyone’s assets should be invested in P2P – these regulations simply officiate that rule-of-thumb,” he said.