The peer to peer [P2P] lending market has never been without controversy; despite being regulated by the FCA from April 2014 when it took over the regulation of consumer credit from the OFT. As early as 2016, the FCA launched a review of its regulation of the crowdfunding sector and that review resulted in additional proposals (CP18/20). The proposals were designed to balance proportionate regulation with consumer protection in a manner that did not stifle product innovation.
Even a cursory look at headlines relating to the P2P market over the last 2 years will confirm that the regulatory balance was not weighted significantly towards protecting consumers; the harm identified in 2016 (unacceptable conduct, unreliable performance, disorderly failure, inappropriate product sales and poor customer treatment) had not been addressed. It was clear that further regulatory intervention was needed, so observers and commentators should not have been surprised to see an FCA clampdown in the policy statement PS19/14, released this month. This included the application of MCOB rules to P2P lending within days of the paper being issued, with other new rules being applied from December 2019. Such urgency around implementation dates proves the FCA means business.
There is a bright future for compliant P2P lenders. As the FCA states, “the P2P sector offers valuable choices”, but there is no doubt that P2P lenders have received a significant warning shot across their bows. Those firms need to consider what changes they must make to ensure compliance (and in terms of MCOB compliance that review needs to take place immediately).
Rockstead has significant experience in the oversight of MCOB regulated loans and the procedures in place to support them. To date our work has focused on helping firms improve standards, assessing suitability and affordability, reviewing risk and compliance positions and measuring conduct risk. We have also recently been engaged by firms in the sector to review financial promotions and marketing materials.
We are happy to share that experience – call us to chat and see how we can help your firm.