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FCA publish final P2P rules

Ryan Fowler

March 6, 2014

By boosting consumer protection, the rules will help ensure that consumers have access to fair, clear information that is not misleading, when using loan-based, or securities-based crowdfunding platforms.

Christopher Woolard, director of policy, risk and research at the FCA, said: “We want to ensure that consumers are appropriately protected – but not prevented from investing.

“We have been careful to listen to feedback from the market and the rules provide consumer protection, whilst allowing businesses to continue to have access to this innovative method of funding.”

The crowdfunding market is small but growing rapidly. Securities-based crowdfunding, which the FCA already regulates, allows people to buy shares or debt securities in a company.

Last year £28m was raised for growing businesses, an increase of around 600% on 2012 figures.

Loan-based crowdfunding (mainly peer-to-peer lending), which will be regulated by the FCA from April 2014, saw £480m lent by consumers to individuals and businesses in 2013, a rise of around 150% on the previous year.

The FCA consulted on its proposed rules in October 2013. The majority of feedback was positive and supported the FCA’s consumer-oriented approach.

James Meekings, co-founder of Funding Circle, welcomed the FCA’s new rules and said they would help move the sector into the mainstream.

He said: “The introduction of proportionate regulation will be a step-change for the industry and will cement our position within the wider financial landscape.

“The FCA has shown foresight in striking the balance between enabling the industry to continue to flourish while ensuring the protection of investors and borrowers.

“Peer-to-peer lending is now a £1bn industry and it is predicted to grow to over £12billion per year within the next decade.

“Funding Circle alone is currently facilitating £20m of loans every month so it’s only right that a industry of this size becomes regulated, giving consumers even more confidence that peer-to-peer lending is here to stay.”


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