P2P bosses optimistic after FCA roundtables
The City watchdog has stepped up its engagement with the peer-to-peer lending industry, raising hopes about the regulatory direction of travel.
Stakeholders present at roundtables hosted by the Financial Conduct Authority (FCA) heralded the “unprecedented access” to senior figures at the regulator, at a time when the P2P sector is grappling with contentious proposals for strengthening financial promotion rules.
The FCA met with P2P platform chief executives and industry trade bodies such as the 36H Group and the UK Crowdfunding Association (UKCFA), to gain feedback on its proposals, which could result in tougher restrictions on the P2P sector.
“It’s a positive step they’re doing it,” said Bruce Davis, co-founder of crowd bonds platform Abundance and director of the UKCFA, who was present at a roundtable event.
“We submitted quite a lengthy response to the FCA’s discussion paper, and they cited some of that in the consultation, but they also saw some value in having conversations with the industry about the changes to understand what’s behind what we’re saying.
Read more: 36H Group lobbies the FCA to lower its risk warnings for P2P
“I think the industry made its point. There were a lot of strong opinions being expressed by the industry about the changes.
“We’ve had unprecedented access to the people that are writing the policy. They have definitely been listening and have been willing to answer questions even when they are sometimes difficult.”
P2P business lender Folk2Folk was also present at a roundtable event and welcomed the “candid discussion” with the regulator.
“People were very open in the meeting and saying what they thought, that has to be positive thing,” a spokesperson said.
“I think it’s good to have candid discussion about what’s happening with the sector.
“It was a really informative meeting with some interesting discussions centred around the FCA’s definition of high-risk categories and finding out platforms’ feedback on changing risk warnings and appropriateness tests.
“What will be interesting is what they do with the feedback,” the spokesperson added. “Off the back of this there’s a paper the platforms fill in with their feedback on everything the FCA is talking about. There’s some things we agree with, some we don’t have a view on and some things we don’t agree on. It’ll be interesting to see what happens next.”
Read more: Who represents P2P platforms? A need-to-know of the sector’s trade bodies
The City watchdog published its consultation on high-risk investments in January which proposed to ban the promotion of investor incentives, such as new joiner or refer-a-friend bonuses, to improve risk warnings on ads and to strengthen appropriateness tests, for example by removing the ease of retakes.
The consultation closed for feedback on 23 March and the FCA plans to confirm its final rules this summer.
The FCA has previously listened to industry feedback, citing UKCFA research in its consultation paper that showed that investors have a good understanding of the sector, and shelving a proposed marketing ban on P2P development loans for now.
“As part of stakeholder engagement on our consultation to strengthen financial promotion rules for high-risk investments, we hosted roundtable discussions for relevant trade bodies, consumer groups and firms,” said an FCA spokesperson.
“We’re thankful to the attendees for their engagement on this important topic, and we hope to continue this constructive industry engagement as our work progresses.”
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