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Rule Changes Proposed for P2P Platforms

1st August 2018

FCA Propose Rule Changes for Peer-to-Peer Platforms

Peer-to-Peer and loan-based crowdfunding platforms can anticipate a number of changes to their regulatory requirements following FCA Consultation Paper CP18/20

In 2016 the FCA launched a post-implementation review (PIR) of their regulation of the crowdfunding sector – covering both investment-based and loan-based crowdfunding.

Last week, the regulator issued a Consultation Paper C18/20 that summarises their findings as well as consults upon proposed new rules and guidance for ‘peer-to-peer’ platforms (loan-based crowdfunding platforms) also referred to as P2P platforms.

>> View the Consultation Paper <<

The changes being proposed by the regulator are designed to address the ways in which the loan-based crowdfunding model has developed since loan-based crowdfunding rules were introduced back in 2014.  

The regulator informs that they have observed a variety of loan-based crowdfunding business models, some of which have become increasingly complex, and that based upon their findings, they are making a number of proposals for rule changes including:

• proposals to ensure investors receive clear and accurate information about a potential investment and understand the risks involved;
• ensure investors are adequately remunerated for the risk they are taking;
• transparent and robust systems for assessing the risk, value and price of loans, and fair/transparent charges to investors;
• promote good governance and orderly business practices; and
• proposals to extend existing marketing restrictions for investment-based crowdfunding platforms to loan-based platforms.

Whilst the consultation proposes changes to the rules for loan-based crowdfunding, there are no changes proposed for investment-based crowdfunding platforms since detailed regulatory obligations already exist to manage the risk of investment business.

Anyone wishing to respond to questions posed in the consultation should look to respond 27th October 2018 as the FCA will then look to publish rules in a Policy Statement in Q2 of 2019

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