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Trade Body Moves to Drive Greater Transparency in Peer-to-Peer Lending

By Ryan Weeks on 21st October 2015

A short update on the P2PFA, which is updating and upgrading its Operating Principles.


The industry trade body, which claims that its membership covers 90% of the UK peer-to-peer space, is instilling a new set of standards. The new rules include requiring all member platforms to publish debt data to “a common standard”, to make their loan books transparent, and to ensure that all retail investors are lending on the same terms as institutional investors.


Many of the P2PFA’s members – Zopa, RateSetter, Funding Circle, Landbay, LendInvest and MarketInvoice – already publish their full loan books online. These loan portfolios may be downloaded via the AltFi Data “Loanbooks” page, or by visiting the platforms directly. Lending Works, Madiston LendLoanInvest and ThinCats will now also be required to make their loan data available for public perusal.


Here’s the exact wording of the new Operating Principle that pertains to the publishing of loan data:


“Platforms should publish full data on their loanbook. This is a loan by loan view of the portfolio of loans originated through the platform and must include but not be limited to: loan ID, borrower ID (or linked loans), date accepted, loan amount, gross rate, term, security, use of funds (inc lending for money lenders), sector, country, status (e.g. late, bad debt), repayment type (e.g. fully amortising). Loans shown in the loanbook should be for loan contracts that the platform’s lenders are directly lending to (as opposed to loans that a borrower (money lender) may make and held as security). The loanbook data must be updated at least monthly and consistent with the other data requirements.”


The move to formally level the playing field between retail and institutional lenders likely won’t change a great deal about the functionality of the sector. The FT reported in May this year that the P2PFA was acting to ban institutions from “cherry picking” peer-to-peer loans. But representatives of both Funding Circle and Zopa suggested that this so-called “ban” was something of a misnomer, as neither firm believed that institutional “cherry picking” – as it occurs in the US market – existed in the UK space. 


Christine Farnish, Chair of the P2PFA – which is today hosting its annual Summit in conjunction with LendIt Europe – commented on the news:


“With almost £2 billion of new lending in 12 months, it’s important that the P2PFA continues to set standards of good practice in the sector. Consumers can be confident that they are dealing with responsible platforms when they see the P2PFA logo.


“Our new Operating Principles set a benchmark of fair dealing and transparency. By the New Year, all our members will publish their full loan books, show bad debt losses in a comparable way, and commit to enuring that retail investors get a fair deal compared with institutions.


“These new measures will help build further consumer confidence, demonstrate our commitment to ethical practice and set a beacon of good practice across the market.”


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