FUNDING Circle’s US division is urging the Securities and Exchange Commission (SEC) to amend its restrictions on peer-to-peer retail investment.
The P2P business lender’s US platform is only open to large institutional investors and accredited investors, due to SEC rules.
The US financial regulator limits annual investment to five per cent of an investor’s annual income if their yearly income or net worth is under $107,000 (£86,075), rising to 10 per cent if the investor earns more than that.
The SEC is reviewing ways to simplify its rules to expand investment opportunities.
Read more: Funding Circle dropped from FTSE 250
Ryan Metcalf, head of US regulatory affairs at Funding Circle, highlighted the UK model as a way forward.
“A platform in which anyone can invest in small businesses is permitted in the UK, not the US,” he said.
“While many marketplace lending platforms in the US issue exempt offerings, most do not provide a retail product, such as a registered fund or a P2P programme because of the costs, time and complexity required to register each offering with the SEC.”
He said the SEC’s disclosure guidelines were largely developed long before internet-based investing developed and do not allow marketplace lending platforms to maximize their reach and effect.
“The regulatory costs and limitations, imposing significant barriers to entry and ongoing expense, are in turn imposed on prospective investors, who are unable to access alternative, diverse investment opportunities,” he added.
“Therefore, Funding Circle is only able to allow large institutional investors and accredited investors to invest on the platform in the US whereas in the UK, we have more than 92,000 individual investors on the platform in addition to institutional investors and local governments.
“Diverse, long term investors are an important part of creating a stable and reliable platform that can withstand macro-economic events and ensure small businesses can continue to access capital, especially since banks continue to fail to do so.”