Surprising new research from secured lending platform LendInvest found that four in five consumers are totally unaware that peer-to-peer lending is regulated by the FCA. The nationwide survey of 2,000 people also discovered that 78% of people felt it made no difference to them whether the sector is regulated or not. Regulation by the FCA – which is also required of mainstream financial products – was implemented to provide greater protection to customers. Many expected the process to be a key factor in lifting P2P lending into the mainstream, but it would appear that the nation is still largely in the dark (or indifferent) when it comes to the subject of regulation.
“Regulation was rightly received as a welcome milestone for the industry. It was a ‘stamp of approval’ that has helped to raise standards and increase consumer confidence in a form of finance that has much to offer ordinary borrowers and lenders.
“Yet despite the huge growth of the sector and the attention it has received from regulators, it is clear there is still a great deal of work that needs to be done to educate consumers on the positive role P2P finance can play.
“With access to finance becoming even harder for the man on the street, P2P has the potential to have a really positive impact on both the mortgage and business lending markets.
“In short, it’s clear people are disenchanted with the world of ‘old finance’, and this includes regulation and the regulator. The philosophy behind peer-to-peer is that it allows people to take investment decisions into their own hands, which is perhaps why people are understandably less concerned about the regulator's view.”
None of this is to say, of course, that there is no value in the FCA’s regulatory regime. For one, the P2P platforms are unanimously fearful of a rogue operator having an adverse impact on the industry as a whole. The standards implemented by regulation lessen that risk.