Peer-to-peer lenders get a boost from regulation
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.The new City watchdog will regulate peer-to-peer lenders when it comes into being next year.
The lenders, such as Zopa, RateSetter and Funding Circle, match people and small firms needing to borrow with individual lenders to produce better deals for both.
But the lack of regulation has put some people off thinking about lending because any cash they offer is not protected by a depositor’s safety net, as it would be in a deposit account or investment fund.
That should change when the new Financial Conduct Authority starts up next year, or early 2014. Those using P2P lenders after that should see their cash protected under the Financial Services Compensation Scheme.
Regulation will also ensure that lenders play by the rules, or face being shut down.
“Government has recognised the importance of peer-to-peer finance for consumers, and understood our potential to rival mainstream banking in the future,” said Rhydian Lewis, the chief executive at RateSetter.
“The regulator’s mandate is to ensure regulated firms conduct themselves in the right manner and to offer appropriate protection to consumers.
“Its mandate is also to promote competition, and the emergence of peer-to-peer offers precisely that.”
The Peer-to-Peer Finance Association said: “This news represents a watershed moment for peer-to-peer lending.”
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments