The City watchdog is to launch a crackdown on peer-to-peer (P2P) lending in a move designed to protect investors from platforms that do not provide sufficient financial information to investors.
The Financial Conduct Authority (FCA) is understood to be considering much tougher curbs in a long-delayed review of the crowdfunding industry in the early autumn. It is understood to be ready to demand that platforms such as Funding Circle and Ratesetter provide more detailed information on the past performance of loans. P2P lenders may also have to be clearer about how much due diligence is carried out on companies looking to borrow money on their sites.
P2P has grown rapidly over the past decade as businesses seek alternative forms of finance. The services, which pool investors’ cash and lend to businesses and consumers, have been accused of masking the true performance of the loans. Some have reduced lending rates, leading a number of investors to question whether they are being properly rewarded for the risks they take.
It is understood the FCA has singled out the industry for scrutiny, raising concerns that a valuable source of finance for start-up businesses could be stifled.
See more at: https://www.thetimes.co.uk/article/watchdog-to-crack-down-on-peer-to-peer-lenders-cfg5sxzkm?shareToken=c62ac46264656693a3839dbaca55b73e