THE GOVERNMENT has rebuffed concerns about delays and awareness of the workings of peer-to-peer lending secondary markets.
Responding to a parliamentary question from Lord Myners about whether investors are properly informed about how a secondary market works, Patrick Courtown, known as the Earl of Courtown, deputy chief whip in the House of Lords, said responsibility lay with the Financial Conduct Authority (FCA).
“The operationally independent FCA recently published new rules for the sector,” he said.
“These will come into force on 9 December and include enhanced requirements on governance, risk management and investor protection.”
However, the FCA’s policy paper on new P2P lending rules only mentions secondary markets three times, two of which are handbook edits.
The main mention of secondary markets in the FCA policy paper says platforms should assess an investors understanding of “illiquidity, including the risk that the lender may be unable to exit a P2P agreement before maturity even where the platform operates a secondary market.”
Lord Myners, a former City minister, also queried whether the British Business Bank (BBB), which has provided funding through P2P platforms such as Funding Circle and MarketInvoice, vets every loan agreement.
Responding on the government’s behalf, Lord Duncan of Springbank, said the BBB operates indirectly through delivery partners.
“The BBB has a thorough delivery partner selection process, which includes robust due diligence,” he said.
“The BBB also monitors existing delivery partners and their performance against contractual requirements or service level agreements.”