Over the last 12 months the loan based P2P industry has seen substantial change – partly driven by the many high-profile platform failures, coupled with the resulting contagion in the industry, and also partly due to increased regulatory scrutiny. The latter was described as a watershed moment for the industry and it is fair to say that the regulatory raising of the bar has driven significant change within firms.
However, investors in P2P businesses are now demanding greater levels of information about the operational performance of the business they invest with. Investors welcomed the improvements announced by the FCA enhancing requirements to clarify what governance arrangements, systems and controls are in place. The additional processes firms are required to take in respect of credit risk assessment were welcomed. However, investors are demanding further change. They want more timely and detailed management information regarding operational performance, enhanced reporting and greater transparency to ensure the security of their investments.
Our usual work with P2P lenders has focused on helping firms improve standards by reviewing risk and compliance positions and conduct risk, financial promotions and marketing. Now we are being asked to adapt our funding line oversight to include P2P credit decisioning and oversight of arrears processes and procedures.
Although, in the UK, we have recently seen a return to an all-time low central bank base rate, P2P investors are concerned that typical SME borrowers are among those most likely to be hardest hit in respect of cashflow during any 2020 economic downturn. Investors are often ahead of the game in these matters, as they are now, and are recognising that to fully understand the risks, they need as much information about post-loan drawdown matters as they do pre-completion issues.
In the current climate, our teams are well set up to work remotely and are fully responsive via phone and email as usual. We have the technology in place to conduct our meetings online or via conference call. We are confident that the quality of service you receive from us will remain as high as usual, so do call us for a chat, to see how we can help your firm.