Quarter of P2P lenders withdraw FCA applications
Over a quarter (26%) of applications from peer-to-peer lenders seeking FCA authorisation have been withdrawn, raising concerns over firms’ ability to meet new regulatory requirements, says Bovill. According to the regulatory consultancy, the FCA has received 114 applications from new peer-to-peer lenders seeking full authorisation since the start of April 2014 and 30 have now been withdrawn in total.
Bovill explains that since the FCA took over the regulation of the sector, it has looked to raise standards and ensure higher levels of consumer protection. Firms now have to segregate client assets, meet new reserve capital requirements and have plans in place to ensure outstanding loans can be transferred if the platform collapses.
The consultancy also points out that the withdrawals may, in part, be a result of a lack of understanding of what peer-to-peer lending actually involves amongst UK financial services firms. Businesses may have applied for authorisation assuming that their activities constitute peer-to-peer lending when they in fact do not, and are now needing to withdraw their application as a result.
Gillian Roche-Saunders, head of venture finance at Bovill, comments: “The high number of withdrawals suggests that the FCA is setting the bar high when it comes to full authorisation for P2P lenders- the process appears to be much tougher and more costly than many firms first anticipated.”http://www.commercialmoneymatters.co.uk/quarter-of-p2p-lenders-withdraw-fca-applications/http://www.commercialmoneymatters.co.uk/quarter-of-p2p-lenders-withdraw-fca-applications/http://www.commercialmoneymatters.co.uk/quarter-of-p2p-lenders-withdraw-fca-applications/