The peer-to-peer lending industry needs a centralised, third-party reporting structure to provide investors and financial advisers with sufficient transparency, stakeholders have suggested.
The FCA’s updated rules for the sector mandate greater clarity in areas such as pricing and defaults on loans, as well as governance and wind-down plans.
However, some industry onlookers think there is still further to go in terms of access to data.
P2P veteran Terry Pritchard, who has worked at Lendy and Kuflink and plans to launch a P2P lender soon, argues that platforms’ in-house data offerings are not sufficient and has called for a standardised reporting structure.
“You can’t advise a sale if you don’t know the terms of the sale,” he said.
“You’re recommending a product to someone and different P2P lenders have different ways of reporting their returns and there’s nothing there that’s standard and you can’t compare them properly.
“How can independent financial advisers research firms if the reporting structure of firms is not standardised?
“They can research to a point, but the information needs to be public and the same for everybody.”
P2P firms currently disclose their data in a variety of ways, although some use third-party data aggregators such as Brismo.
“Interestingly, not many people like to do that, we do because we think we should be transparent and we want third parties to hold us to account,” said Mike Bristow, co-founder and chief executive of CrowdProperty, which uses Brismo.
“We’re leading the market in the statistics we show on our website and opening up our loan cashflow on a third party to assess it.
“Both of those are very important to the sector and it surprises me how many people don’t think it’s very important and how many platforms are not transparent, and lenders should ask why.”
However, some industry sources at platforms have privately noted that Brismo is a paid-for service that does not cover the entirety of the market.
There is also the question of whether financial advisers need a centralised reporting structure, in place of doing their own research into individual platforms’ investment offerings.
Carl Davies, chief operating officer, The House Crowd, said that IFAs should be researching firms themselves and a centralised record is needed to help them.
“After all a good IFA should satisfy themselves on all levels and ask themselves ‘would I put my own money into this investment?’ before recommending any product to their clients,” he said.
“Sometimes qualitative date is just as important as the hard numbers.”
Jeffrey Mushens, technical policy manager at The Investing and Saving Alliance, welcomed the idea of a centralised record, citing the benefits of Compare the Market for customers.
“Enabling customers to be able to make informed decisions is always a good idea,” he said.
“In principle we like it. We love things that help customers make informed choices and something like this may help to do so, in which case we support it.
“Services like Compare the Market encourage competition and give a real benefit to the customers.
“Anything that encourages competition and helps make informed decisions is welcome.”