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What happened?

Following consultation, the Financial Conduct Authority is introducing rules via its Policy Statement PS 19/14 designed to prevent harm to P2P investors, without stifling innovation in the sector. When the FCA set its first rules for P2P, it committed to keeping these under review as the sector evolved. These new rules are designed to help better protect investors and allow firms and fundraisers to operate in a long-term, sustainable manner.

The FCA has refined its proposals to ensure the new rules protect consumers and support the P2P market. In particular, additional guidance has been provided to make it clear that platforms will not be prevented from including information about specific investments in their marketing materials.

As was originally proposed, the FCA is placing a limit on investments in P2P agreements for retail customers new to the sector of 10 per cent of investable assets. This is an important means of ensuring that they do not over-expose themselves to risk. The investment restriction will not apply to new retail customers who have received regulated financial advice.

In addition to these restrictions, the new rules cover:

• • Introducing more explicit requirements to clarify what governance arrangements, systems and controls P2P platforms need to have in place to support the outcomes they advertise, with a particular focus on credit risk assessment, risk management and fair valuation practices
  • Strengthening rules on plans for the wind-down of P2P platforms if they fail,
  • Introducing a requirement that platforms assess investors’ knowledge and experience of P2P investments where no advice has been given to them
  • Setting out the minimum information that P2P platforms need to provide to investors
  • Applying the Mortgage and Home Finance Conduct of Business (MCOB) sourcebook and other FCA Handbook requirements to P2P platforms that offer home finance products, where at least one of the investors is not an authorised home finance provider.

P2P platforms need to implement these changes by 9 December 2019, except for the application of MCOB, which applied with immediate effect. The FCA will continue to closely monitor the P2P market as it develops further.

How can we help you?

We can support you in a number of ways including:

• • Providing initial advice and guidance on some of the key lending framework points currently under consideration
  • Supporting firms who may be the subject of a current FCA visit with a number of different preparation techniques, including mock interviews
  • Undertake audit and health check assessments considering a firm’s current policies, procedures and regulatory framework

Thistle currently works with a material number of P2P lenders in the UK market and can support such firms in a number of other ways.

If you’d like to know more about any of the topics covered above – or to learn more about how we can help – please get in touch via info@thistleinitiatives.co.uk or call us on 0207 436 0630.