Canadian P2P network IOU Central falls foul of regulators

Canadian P2P network IOU Central falls foul of regulators

IOU Central - billed as Canada's first online person-to-person (P2P) lending network - has been forced to halt operations less than a month after launching after regulators in Quebec ordered the unit to close down.

The IOU Central service - which is modelled on other P2P services currently operating in the US and UK - was launched on 13 February.

Borrowers could apply for loans between C$1000 and C$25,000 for a term of up to three years by posting a request on the Web site's listing board. Lenders then bid on the loan requests, stating how much they would lend - between C$25 and C$25,000 - and the rate they would accept.

But according to local press reports, officials from Quebec's financial markets authority believe that IOU Central's officers and directors should register to deal in investments and have ordered the unit to close.

Reports say that lawyers for IOU Central will respond to the order at a public hearing on 6 March.

In a statement on its Web site, IOU Central says the posting of new loan requests and the placing of new bids on loans "has been temporarily stopped".

Loans that have already been closed and funded will be repaid in accordance with the borrower and lender agreement.

IOU Central says it will work with authorities and "take all measures necessary" to comply with regulations. The company says it will e-mail users when the site is fully operational.

Rival Canadian outfit CommunityLend says it is currently carrying out regulatory work ahead of a beta launch in early 2008.

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