PEER-TO-PEER lenders are unconcerned about investors passing appropriateness tests but are worried about the perception of new Financial Conduct Authority regulations.
From 9 December, P2P lenders will have to introduce appropriateness tests and can only market their products to sophisticated, high-net-worth individuals or those who commit only to investing a maximum of 10 per cent of their assets.
RateSetter and Zopa both said most investors have passed appropriateness tests in trials operated by the platforms.
However, speaking at the LendIt Fintech conference in London, executives from both platforms warned the changes make P2P lending appear more risky than it is.
Rhydian Lewis, chief executive of RateSetter, warned the 10 per cent rule is “anti-competitive” as it meant there are now two ISA products – cash and stocks and shares – that don’t have these restrictions, while the Innovative Finance ISA (IFISA) does.
“The 10 per cent rule is draconian,” he said.
“It is not there for things like equities which is as risky.
“We will still respect the rules even if we disagree with it.”
Natasha Wear, chief executive of Zopa’s P2P business, said the appropriateness tests will most likely contain six to 10 questions, but warned it may put people off if they are already uncertain about the product.
“There is a friction with appropriateness tests,” she said.
“The investor pool will become smaller if there is a perception that we are something more risky than we actually are.”
Fellow panellist, Stuart Law, chief executive of Assetz Capital, said most of the answers to its appropriateness tests could be found by investors on its website but these changes just brings it all into one place.