Peer-to-peer loan groups told to stop lending to each other
What you need to know
The Financial Conduct Authority (FCA) said businesses borrowing money and lending it out must have permission to “accept deposits” — which is a feature of the banking sector. Any company borrowing and lending onwards without correct regulatory permission may be committing a criminal offence. RateSetter, one of the three largest UK P2P lenders, has engaged in the practice of lending to lenders — known as wholesale lending — since 2013, though it stopped last December
Why this is important
We can expect that regulation around Peer to Peer lending will be tightened, in order to provide further assurance to investors. One of the main areas of concern is how lenders manage provision funds, that money that is left on the side in case borrowers fail.
What to read more?
Read The Financial Times here
