The CEO of Assetz Capital has warned that regulation of the crowdfunding and peer-to-peer (P2P) lending sectors could spell disaster for a number of participants.
This follows today’s publication by the Financial Conduct Authority (FCA) of its regulatory proposals.
Stuart Law, CEO of Assetz Capital, a P2P lending platform, said: “The FCA’s planned regulation will make the industry far more credible, and could wipe out a significant number of per cent of P2P lenders in the process.
“Well-established, credible peer-to-peer firms will have no problems in adapting to the new regulations, and I’m confident that we meet or exceed the recommendations already. However, I expect that many small, recent P2P lending platforms won’t survive regulation – it’ll be an enormous drain on resources and a very tough process for them, but such guidance and rules are necessary to strengthen the industry further, increasing consumer confidence in the process.
“Moreover, expect to see consolidation in the industry as large, well-established platforms buy up smaller companies which would otherwise be at risk.”
Law added: “In simple terms, the main recommendations for P2P lending platforms are that they keep enough capital to ensure that they remain viable, have a plan in place so that loans continue to be paid to lenders if the platform ceases to operate and follow strict rules when holding client money to make sure that it’s not misused.”
