Frank Wessely, managing director in Quantuma’s restructuring and insolvency team, discusses the importance of trade body representation for P2P lenders…
Peer-to-peer lenders need sector-specific leadership in order to flourish during the coronavirus pandemic, Frank Wessely (pictured), managing director in Quantuma’s restructuring and insolvency team, believes.
According to Wessely, a joined-up approach to P2P representation has never been more needed, in order to protect and champion P2P lending platforms during a time of economic turbulence.
“P2P operates in its own particular way, providing valuable services to businesses and retail borrowers,” says Wessely.
“It offers the opportunity for retail investors to gain a higher consistent rate of return than is otherwise available through most other institutions and products, and it is facing its own unique challenges.
“There is so much turbulence in the economy and in the business world these days, I think that there is a void at the moment where the P2P sector requires a strong, visible face and voice promoting its cause.”
Whilst there are trade champions that support a number of alternative lenders and crowdfunding platforms and they are doing good work, Wessely believes that with a singular voice for the entire P2P sector, more P2P platforms could become accredited to provide government-backed lending in any future measures of support for business.
“I think it’s been a missed opportunity for the sector, and it raises a number of questions as to how the sector should react,” he says.
“If the chancellor decides to reintroduce more comprehensive measures of financial support for businesses, it concerns me how the P2P sector is going to be able to be recognised and react to that, because it’s valuable as part of the financial industry jigsaw to enable financial support to businesses.”
Historically, it has been the responsibility of the platforms themselves to educate their investors and market their products within the strict guidelines set out by the regulator.
This was challenging enough before the pandemic, but without a strong, singular voice speaking out on behalf of the sector, it has become a “very crowded and noisy marketplace”, Wessely says.
He would like to see a trade body that can, amongst other things, develop a vision and strategic five-year plan for the P2P sector.
This body would represent both the larger platforms, which are now operating primarily in the institutional space, and the smaller platforms which are still centered around traditional, retail-focused P2P lending.
It would also act as a communication point for the retail and institutional investors who fund the P2P sector; ensuring that they are well-informed and familiar with the risks and benefits associated with P2P lending.
“It would have a clear purpose and vision that members can buy into, demonstrating this externally as well, so that everyone can see that the sector has a clear direction and is operating on firm foundations,” says Wessely.
“I think that would be a very positive message to put out.”
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