RATESETTER has described new peer-to-peer regulations being introduced next week as a “watershed moment” for the sector.
From Monday 9 December, platforms will be restricted to marketing to those who are certified or self-certify as sophisticated investors, those who are certified as 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 net investible portfolio in P2P agreements.
Rhydian Lewis (pictured), chief executive of RateSetter, said P2P will become a “logical choice” for individuals and advisers.
“We will look back on this as a watershed moment for our industry – the moment that P2P investing came of age as an asset class, competing against other mainstream investment options and the banks as an attractive way to put money to work,” Lewis said.
“Stronger regulation with harmonised standards means that people can invest in P2P with greater confidence than ever.
“P2P will now become a logical choice for any individual or financial adviser building an investment portfolio diversified across different asset types.
“For first-time P2P investors, 10 per cent is a sensible place to start and once you are experienced you can invest more.
“This is exactly what we have seen over the past 10 years, with people dipping their toe in and then growing as they see the value. The limit will become a target, encouraging every investor to think about diversifying some of their money into P2P.”
Read more: Feature: Playing by the rules
Charlie Taylor, head of property P2P platform Octopus Choice, predicted a shake-up in the sector.
“The FCA’s strengthening of the rules for P2P platforms is a long overdue professionalisation of the industry,” he said.
“All providers will now have to be much more transparent about their loan book and historic performance. The new rules should also result in significantly improved controls around risk management and governance. This is clearly good news for investors and should give them more confidence when selecting a P2P platform.
“In the longer term, there’s also the potential for an industry shake up, as it’s likely that a much greater proportion of new P2P investment will now go through financial advisers.
“Some firms, like Octopus, are already set up for this and have been working with advisers for years. For others this marks new territory, and many will have to adapt if they are to compete in the future.”