Zopa asked FCA to regulate P2P lending more than decade ago
Peer-to-peer lending platforms tried to get regulated more than a decade ago but were rebuffed by the City watchdog, an industry adviser has revealed.
Fintech adviser Martin Campbell, who was advising Zopa in its early days, has revealed that the Financial Services Authority – the predecessor to the Financial Conduct Authority – hung up during calls from the platform to request information on becoming regulated.
“Our experience back then was very disappointing,” he told Peer2Peer Finance News.
“All we got back then was that ‘you are outside the perimeter and we don’t have responsibility for you’.
“We were in good faith trying to find the right person to talk to but were told to go away and had the phone slammed down on us.”
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Campbell said the call where the regulator hung up on the Zopa executive took place before 2009, suggesting the City watchdog had opportunities to start putting rules together more than 10 years ago.
He said early P2P lending platforms such as Zopa, Funding Circle and RateSetter were worried about cowboys entering the sector and had seen some worrying examples which prompted calls to the regulator, which were subsequently ignored.
This motivated them to set up the Peer-to-Peer Finance Association in 2011, as a self-regulatory body to set standards for platforms.
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Campbell added that Zopa did manage to get a meeting with the Treasury to discuss its loans being put into an ISA.
The government department supported this idea but said platforms would need to be regulated first, Campbell revealed.
The FCA – which replaced the FSA in 2013 – took over supervision for consumer credit in 2014 and as a result decided all P2P platforms needed full regulatory permissions. In 2016, then-Chancellor George Osborne introduced the Innovative Finance ISA.
More detailed regulations for P2P lenders were introduced in 2019.
It comes as an employment tribunal has led to the release of a number of emails which show that the City regulator was “confused” about how to regulate P2P lending.