FCA interim report ruffles P2P feathers

  • The Financial Conduct Authority’s recent Interim Feedback report has certainly ruffled some feathers. Its publication prompted emotive headlines to appear like ‘FCA to crackdown on P2P lenders’ (Guardian) and ‘FCA launches crackdown on crowdfunding’ (Money Observer), which may have served to grab readers’ attention, but in reality seem a little wide of the mark.

    Sure, the report sets out some areas of concern. As the P2P market has evolved some platforms have been pushing the boundaries of the interim permissions that many have been working under. And without question there are areas of possible confusion for investors (who must never, ever be referred to as savers), but it doesn’t follow that the entire Altfi revolution has been discredited just because the rules have to be tightened for an industry that is growing like Topsy.

    That the FCA itself bunches together equity crowdfunding with debt crowdlending under the common label of crowdfunding doesn’t help, when they really are very different types of investment and risk. Or, that the authors use terms like ‘regulation arbitrage’, which apparently means that some platforms appear to operate in similar fashion to either banks or investment managers, but are not bound by the strict rules that govern either of those two professions. Some clarity and simplicity from all parties would be welcome.

    What we do know from the report is that the new rules covering the ‘crowdfunding’ sector will not be published until next summer. What we don’t know is what it means for some of the platforms – including the big three of Funding Circle, Zopa and Ratesetter – who are held in a queue waiting for full authorisation. Does the timing of the new rules mean that none of them will be allowed to pass through the gate until the mid-2017?

    One organisation watching from the sidelines is Resolution Compliance, which is authorised and regulated by the FCA and which specialises in providing ‘Appointed Representative’ status to crowdfunding platforms that are just starting up. So far, it has helped ‘incubate’ over 30 firms in this way, a number of whom – including Crowdstacker, Crowd2Fund, Syndicate Room and Abundance – have gone on to secure their own full authorisation from the FCA.

    Interestingly, although Resolution has Innovative Finance ISA Manager permission that it could grant to its appointed representatives, it has not done so “because the rules are not clear enough – there is too much ambiguity.”

    Commenting on the latest FCA reports, Resolution Compliance founder and CEO James Dingwall said: “The FCA are doing a good job based on what they’ve been left with.”
    “Many firms we talk to don’t have the ability to meet the threshold of requirements and many business models simply do not work. Some don’t have the money or experience. We have to be very selective, which is why we have only granted appointed representative status to 30 or so out of the 200 who have approached us. We apply our own strict appropriateness test.”

    “As regards the future, I don’t think the IFA community is going to support the P2P sector until they can get the Professional Indemnity Insurance cover. On the other hand, I think SIPP providers could open up the market considerably.”

    Food for thought.

Related articles

  • Read More

    InsurTech needs to learn from Altfi and FinTech

    The winds of technology-induced change have been ripping through the financial service industries for quite a while now – banking and fund management being prime examples – but up until now the...

  • Read More

    FinTech as a force for good

    Kids, they say, grow up quickly and nowhere is this more true than in FinTech. Barely five years ago, the phrase wasn’t even invented. Now it is the collective noun for billion dollar enterprises,...

  • Read More

    Insurance Industry jobs could be lost to robots and AI

    Speculating on how far the robot revolution could go is nothing new – Hollywood has been producing apocalyptic films for decades showing machines ruthlessly taking over from humans as masters of...

  • Read More

    What is a bank?

    One of the recurring themes at this year's AltFi Europe event, organised by the excellent AltFi team, was a quest for the definition of a bank, or more particularly a bank of the future. Is it any...

  • Read More

    Giles Andrews' appointment marks another step on P2P’s road to maturity

    Students of the history of finance may one day look back on Giles Andrews’ appointment to the Chair of MarketInvoice (MI) as a major milestone in the evolution of the P2P sector....

  • Read More

    New community for Bank of England’s FinTech Accelerator

    The Bank of England has made steps towards improving relations between itself and the Fintech sector with the launch of its new community. The community intends to bring the Bank and Fintech-related...

  • Read More

    Credit where it’s due

    Sometimes you just have to say ‘well played’....

  • Read More

    Professor to sort Bank Referral Scheme

    The much-vaunted Bank Referral Scheme master-minded by the Treasury went live on November 1 last year, followed by deafening silence ever since. Anecdotal stories have been trickling out that suggest...

  • Read More

    Is consumer car finance the next big opportunity for P2P?

    Two very clear trends are emerging in the Alternative Finance sector. First, with lenders casting aside any doubts about security to get at the attractive yields available, the pressure is on for...

  • Read More

    Challenger banks to receive unexpected boost from RBS

    At long last, the shareholders of RBS (still 73% owned by the State) have received a piece of goodish news that should help raise their spirits. Faced with the prospect of missing the deadline for...

Take the first step

To find out more about how we can help you grow faster, please get in touch. We'd like to hear from you.  Or try our instant marketing healthcheck, it's free!

Quick Contact

Quick contact

Close

Contact us

T 01825 765617

E hello@themarketingeye.com

Our offices

Full details of our offices in London and Uckfield more

Request a call

Close
'; ';