Innovate Finance is representing peer-to-peer platforms in talks about non-bank lenders receiving access to cheap funding from the Bank of England, Peer2Peer Finance News can reveal.
The industry body has argued that without access to the Bank of England’s Term Funding Scheme – which is currently only available to banks – many non-bank lenders have been prevented from delivering the government’s emergency loan schemes.
“We’ve made the case to the government that it’s difficult for P2P lenders to provide emergency loan schemes because they don’t have the same access to cheap funding,” said Iana Vidal, head of policy and government affairs at Innovate Finance.
“I think P2P has a huge role to play in delivering the emergency loan schemes and we’ve been trying to get that across to the government.
“Part of the purpose of the schemes is to get finance out quickly to SMEs and that’s where fintech and P2P comes into play.
“We think they are integral to the conversation and have been saying for a number of weeks that there are some really innovative companies and we should be utilising their technology to support the wider measures out there providing finance to businesses and consumers during this time.
“And we’re fully aware that these interventions from schemes cause customers that usually would have been spread out across many lenders to just use a few institutions. We’re aware of that impact from a P2P viewpoint and generally and are monitoring it.”
P2P lending platforms have welcomed news of the talks.
“It would be brilliant,” said David Bradley-Ward, chief executive of Ablrate.
“Getting access to the cheap funding like banks and levelling the playing field with them would be great. I’ve always been an advocate of alternative finance lenders being on the same level as banks. If anything, banks’ technology is terrible.
“I’d be up for something like this, but the ultimate issue is suddenly giving P2P lending platforms quick access to finance wholesale would remove the need for retail investors and it wouldn’t be P2P anymore.”
Daniel Rajkumar, managing director of Rebuildingsociety, said that having access to this type of funding would help to fight unfair competition in the marketplace, which at present, is his platform’s largest threat.
“It’s difficult to compete without being able to get access to the credit in the same way banks can get access to capital,” he said.
“It’s really important to get access to Bank of England funding options to remediate unfair competition.”
It is understood that one option which is being discussed in the talks is the possibility of big banks giving alternative lenders access to cheap term funding through special purpose vehicles to raise funds for them to use.
Earlier this year, Innovate Finance formed the 36H Group, which focuses on the policy and regulatory matters which are affecting the P2P sector.