The Financial Conduct Authority (FCA) will introduce additional regulation for the peer-to-peer lending sector, according to a business advisory specialist.
Frank Wessely, partner at advisory firm Quantuma, said he hopes additional restrictions will not be introduced, but warned that this is the sentiment that is coming from the FCA.
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“This is how the FCA has categorised P2P lending,” he told Peer2Peer Finance News.
“It has explicitly said it wants more restrictions for retail investors that put money into what they call high-risk investments and that tars P2P with the same brush, so I would expect more restrictions to be introduced.
“It would raise challenges for the sector, depending on whether a platform is focused in terms of its investors. If a platform has an institutional funding line that’s a different scenario.
“I’m slightly more pessimistic and think there will be regulations that will come in. There will hopefully be a further consultation so the industry will have an opportunity to speak its mind and we’ll have to see how that dialogue goes.”
Earlier this month, the FCA published a three-year strategy to enhance consumer protections. Within the plan, the regulator said that it is aiming to halve the number of consumers putting money into high-risk investments who indicate a low risk tolerance or demonstrate the characteristics of vulnerability, by 2025.