PEOPLE using peer-to-peer (P2P) lending sites will have more protection from being ripped off next year under plans unveiled by the city watchdog yesterday.
P2P companies, a form of crowd funding linking savers and borrowers, will be forced to hold a percentage of their loaned funds or £20,000 – whichever amount is higher – as capital on their balance sheets. From April 2017, this amount will rise to £50,000, according to Financial Conduct Authority (FCA) plans.
The other prominent form of crowdfunding, equity crowdfunding, has also been targeted by the FCA in the past.
The move comes as the authority takes over the regulation of the consumer credit market from the Office of Fair Trading next year.
P2P groups welcomed the move. Giles Andrews, founder of the UK’s largest P2P network Zopa, said: “We are reassured that regulation will be a force for good in the P2P lending industry.”
Peer-to-Peer Financial Association chair Christine Farnish added: “It is good to see that the FCA recognises the important differences between peer-to-peer lending... and equity type investing via crowd funding platforms. These activities are like apples and pears.”