Aussie P2P Lender Calls for more Regulation

By Henry Thomas on 7th July 2015

P2P/Marketplace Lending

Stuart Stoyan, founder of the P2P lender MoneyPlace, has drawn attention for his opinion on regulation after claiming “there’s not enough of it”.

Aussie P2P Lender Calls for more Regulation

The Australian reported the remark at a recent disruptors’ conference, in which he told his Financial Services Institute of Australia (FINSIA) audience that:

Our biggest fear is a major failure by a P2P lender, or a company claiming to be one, that causes ASIC or another agency to come in and say: ‘we’re shutting this down’.”

The claim is perhaps a little surprising, given that MoneyPlace is not yet functional. The platform is still in the process of raising $2-2.5 million and, following this, they will need to secure an Australian Financial Services License. MoneyPlace is aiming to have this completed by August. However, with Mr. Stoyan’s background – he spent three years at National Australia Bank – he is well placed to discuss the integrity of the industry. Mr. Stoyan continued:

As other people see the opportunity you might start to get less refutable players, like in the payday lending industry.

Recent weeks have seen much reporting from AltFi on the expansion of the Australian alternative finance industry: in April we reported on OnDeck’s expansion into the Australian market, in June it was Spotcap’s turn to enter the market and last week we discussed ThinCats Australia’s plan to stage an IPO. This was part of the plan from ThinCats’ CEO – Sunil Aranha – “to capture a relevant share of an estimated $12-15 billion market”.

Mr. Stoyan’s view creates an interesting contrast to what many view as one of alternative finance’s most appealing qualities – the ease of doing business thanks to its low level of regulation. Chris Maule, writing for AltFi, voiced a similar desire for increased regulation – this time in the UK space – due to the benefits to transparency. Their arguments seem valid – many have questioned alternative finance’s ability to survive in the event of an economic downturn. Stronger regulation should ensure that lending platforms are able to weather the storm to a far greater degree than without. A look at the Chinese market may create cause for concern. The under-regulated market is home to roughly 1,000 active platforms, of which 58 closed down in the last quarter of 2014 – amid complaints of poor regulatory oversight.

The continued buoyant growth of the P2P market will increase debate over the need for greater regulation. Greater regulation may not hinder growth, and should make the industry more sustainable in the long run.

Comments

Paul Missio - co-founder Lend2Fund

09 Jul 2015 08:57pm

Hi, I just wanted to add my comments regarding regulation of P2P in Australia with respect to those expressed in this article. I) I don't think it's very helpful to say that the industry requires more regulation without suggesting the areas where new regulation is required. Vague comments like this just muddy the water, and are motivated more by a "don't fuck it up for me" attitude, rather than contributing to the debate. ASIC have a difficult job to do, and I am sure that even with my 30 years experience in Banking and Finance, I'm still not in a position to tell these guys how to do their job. 2) I believe that the comment regarding the appeal of P2P lending having a "low level of regulation" doesn't particularly apply to Australia. P2P lenders in Australia are required to comply with the same regulations as all other financial service providers in Australia. There are no shortcuts or loop-holes. These rules have been developed over several decades. However, I do agree that there is a greater ease of doing business with p2p lenders, but this is due to better technology, better processes and lower volumes rather than lower regulations. 3) it's a little bit reckless to be talking about ASIC shutting the industry down due to the first dickhead in the market. APRA and ASIC haven't shut down the wealth management and banking industries due to the ANZ/Opus Prime, CommBank, NAB, IOOF and Macquarie advice fiascos, the BBSW and LIBOR manipulation scandals, and the stock market wasn't shut down due to the OneTel, FAI, ABC, Babcock & Brown or Storm Financial collapses. It's life, and that's why the rules and penalties exist. Good luck to Stuart and MoneyPlace, but let's make sure we have our eyes on our own back yard to ame sure that we are not the first dickhead collapse in the P2P lending market - and let ASIC Get on with the job.

Fiona Dee

09 Jul 2015 06:27am

First impressions count - take a look at the guy, plus his tiny fund raising effort and his insignificant time spent at NAB (the basis of his so-called experience) - this article should probably not have been published.

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