FCA’s P2P rules come into force

Michael Lloyd

December 9, 2019

The FCA’s peer-to-peer (P2P) rules come into force today.

For retail investors new to the sector who haven’t received regulated financial advice, the FCA has placed a limit on investments of 10% of investable assets.

This is to ensure investors do not over-expose themselves to risk.

Brad Bauman, chief executive at Fitzrovia Finance, said: “The new guidance from the FCA has been implemented to discourage individual investors from being over exposed to property investment platforms.

“For sophisticated investors, the opportunities available through our and other secured property debt platforms provide a great choice to diversify their portfolios and improve returns on their investments in a low interest environment and given a volatile stock market.

“However, we recommend that investments should be spread across a number of platforms and they should only make up part of your overall portfolio – certainly no more than 10%.”

The regulator has made more explicit requirements to clarify what governance arrangements, systems and controls platforms need to have in place.

This is to support the outcomes they advertise with a particular focus on credit risk assessment, risk management and fair valuation practices.

It has strengthened rules on plans for the wind-down of P2P platforms in the case of failure and have set out the minimum information that P2P platforms need to provide to investors.

The FCA has also introduced a requirement that platforms assess investors’ knowledge and experience of P2P investments where no advice has been given to them.

Sign up to our daily email