FCA’s review of peer-to-peer lending
Lending Works welcomes the Financial Conduct Authority’s review of peer-to-peer lending and crowdfunding (published in February 2015), and the regulator’s ongoing oversight of our industry. We are committed to ensuring our services are transparent and easily understood by all existing and potential lending and borrowers.
The piece made some positive observations, including:
On the regulator’s visits to firms: "We were encouraged by what we found during our visits, including a good understanding of credit risk and robust Anti-Money Laundering and Know Your Customer checks"
On the regulator’s request for platforms to make changes to their financial promotions: "All the firms we wrote to were keen to comply and most made the required changes with immediate effect"
The regulator made some observations on the financial promotion issues they found with some platforms during their review:
Promotions comparing crowdfunding investing to savings accounts and banking and, in doing so, creating the impression that the lender’s capital was secure;
Insufficient information in promotions about the taxation of investments;
From the perspective of the borrower, the omission or lack of prominence of the representative APR; and
Promotions having a lack of balance by giving prominence to the benefits of borrowing without a prominent indication of risk in relation to the borrower’s financial circumstances.
Lending Works firmly supports the FCA's approach to the regulation of peer-to-peer lending and the principles it has implemented. For some time before this review was released, Lending Works has provided webpages dedicated to informing consumers about each of the topics the FCA has highlighted.
These articles can be found by clicking the links below:
To read the regulator’s review in full, please click here.
There is barely a week to go until the conclusion of the 2017/18 financial year, which means that, as ISA season begins to hot up, time is running out to take advantage of your ISA allowance.
At the Summer Budget in 2015, George Osborne had multiple nuggets of good news for investors in peer-to-peer lending (P2P), most notably the announcement of the new Innovative Finance ISA (IFISA).
Over the last decade, there can be little dispute that the reputation of mainstream banks – and particularly the so-called ‘Big Four’ (HSBC, Barclays, Lloyds and RBS) – is at its lowest ebb.
The peer-to-peer (P2P) lending industry is now regulated by the Financial Conduct Authority (FCA). The regulatory framework has been designed to protect customers and promote effective competition.
Loan underwriting is the process that we undertake to analyse all of the information provided by each loan applicant and their credit file to assess whether or not that applicant meets our minimum loan criteria. As part of that process all data is verified, analysed and summarised to paint a picture of each applicant.
When you earn interest from a regular bank savings account, for example, the bank automatically deducts basic rate tax (currently 20%) before paying your interest. With interest earned from peer-to-peer lending, tax is not deducted automatically so lenders will need to declare their income to HMRC.
As 2018 draws to a close, with our bellies full of Christmas turkey, it's only natural to look back on the past 12 months and reflect. No doubt, it's been a turbulent one economically and politically, and not everyone has had it all their own way.