P2P lenders target UK market ahead of new regulation

P2P lenders target UK market ahead of new regulation

The UK could be swamped by P2P lenders after it emerged that more than 100 companies have sought regulatory authorisation while almost 200 are already operating via interim permission from the Financial Conduct Authority (FCA).

The figures, which were obtained by regulatory consultant Bovill and reported in the Financial Times means that the number of P2P lending platforms in the UK is much higher than the FCA's estimate at the end of 2014 that only 56 platforms were active in the UK.

The FCA assumed regulation of the P2P sector in 2014 and is currently in the process of implementing a full regulatory regime that would include compliance with client money rules, the creation of a 'living will' so that loans can be transferred should a platform collapse and the introduction of a minimum capital adequacy requirement of £20,000.

According to Bovill, the new regime, which the FCA hopes to have in place by April 2017, is tough in terms of client money rules but 'light touch' in many other ways, most notably its exemption from the Financial Services Compensation Scheme.

"Everyone feels it's a bit of a land grab now there's more certainty about the regulatory regime," Gillian Roche, Bovill's head of venture finance, told the FT.

The P2P lending market, which has existed for over a decade, has grown enormously over the last two years. Figures from the Peer-to-Peer Finance Association show that the UK market lent more than £1.2 billion in 2014 while the number of lenders rose by a third.

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