RateSetter’s chief executive Rhydian Lewis has heralded a new era for peer-to-peer lending, bolstered by new regulations and a more inclusive industry trade body.
9 December 2019, when the Financial Conduct Authority’s updated rules for the sector came into effect, was “the end of the beginning” for P2P, Lewis said.
“I think the new regulations have put the industry on a more sustainable footing,” he told Peer2Peer Finance News.
“The conditions are set for P2P investing to go mainstream.”
The new FCA rules include investor marketing restrictions, which restrict everyday investors from putting more than 10 per cent of their investment portfolio into P2P loans.
Rather than deter retail investors, Lewis said that the new rules would put P2P on the radar of the mainstream investment landscape and could, in fact, help attract more financial advisers to the space.
Seeing the 10 per cent rule as a target, rather than a restriction, could mean that advisers who have previously ignored the sector may now consider recommending it to their clients, he explained.
RateSetter is launching a dedicated independent financial adviser portal this month, opening up the platform from self-directed investors to the adviser community.
Lewis said that the first pound of money invested through the new portal would be a pivotal moment, although he predicted it would take two to three years to see real inflows.
RateSetter is one of the members of the P2P sector’s new industry trade body, the 36H group, which is a sub-group within fintech organisation Innovate Finance.
The ‘big three’ P2P lender notably departed from the industry’s former trade body, the Peer-to-Peer Finance Association (P2PFA), in 2017.
“The 36H Group is a more consistent voice for the industry,” Lewis said.
“I think the name removes ambiguity over who can join.”
36H refers to article 36H of the Regulated Activities Order, which relates to operating an electronic system in relation to lending.
The P2PFA previously counted platforms such as MarketFinance – then MarketInvoice – as a member, which did not operate under article 36H.
The new group will provide “a strong and muscular voice for the industry”, Lewis said, through lobbying and promotion.
Rumours of a RateSetter initial public offering have circulated for years and Lewis himself has previously called it a “natural step” for the business.
However, Lewis said that a stock market flotation is unlikely to happen before 2022.
“We take a really long-term view here,” he added.
“One has to react to circumstances.
“It’s an advantage to take a bit more time.”
Lewis noted that “a P2P lender going out early [to the public markets] had been met with a mixed reception” and cited the uncertain macroeconomic environment as another reason to be cautious.