"Risk control has been a challenge for P2P sector, and we aim to build a safe platform for investors by our professional capabilities and business pattern innovation"
Cao's comment is particularly relevant, given recent announcements by China's regulatory bodies. In July the People's Bank of China announced a fresh set of regulations and policies to clean up the sector. Moreover, just this month, the China's Supreme People's Court (SCP) announced its interpretation on lending dispute rules - emphasising that platforms retain some liability when using a third party guarantor.
The Chinese market is huge, having transacted between 800 billion and 1 trillion yuan this year ($128 billion - $160 billion), according to Guo Dagang – Secretary General of the P2P Industry Association. However, it is certainly under regulated and plagued by malpractice at present. The P2P market in the UK is much more sensibly policed. Some argue that the UK sector provides a blueprint to other, less mature, economies. Zopa’s Mr Andrews once said of the matter:
“I was asked to address a group of Chinese regulators a year ago and they were really interested in understanding how UK regulators approached the sector.”
It appears that insurance activity may be another example of the UK’s relative sophistication, with ArchOver and Lending Works leading the way. Both companies have partnered with big insurers to provide better protection to their investors.
Migang’s move looks like an attempt to raise their credibility in a market that struggles with a poor reputation. They must be careful to adhere to recent announcements, but it’s a positive step in the right direction.