It all started last July, when the US Department of Treasury issued a request for information (RFI), soliciting comments, data and recommendations to determine how and whether regulators should apply stricter rules to the marketplace lending sector. As the majority of insiders might remember, the RFI was comprised of 14 specific questions that aimed to explore several issues, including the impact of marketplace lending on market segmentation, implications for anti-money-laundering and fraud, and considerations in relation to traditionally underserved demographics.
Many platforms responded to the Treasury’s questions, including the world’s largest publicly listed marketplace lender Lending Club. We published CEO Renaud Laplanche’s response in our Views section last September.
The request was followed by a series of roundtables and events hosted by the Treasury last August, which involved over 80 industry experts.
According to American Banker, a Treasury spokesman has revealed that the information gathering process is now at its end, with the inbound white paper representing the culmination of the process:
“After considering the public comments we received and additional input, we engaged with stakeholders and regulators to explore these themes further and develop recommendations for the safe growth of this industry. We look forward to sharing our research and recommendations with the industry and the public and remaining engaged on innovation in consumer and small-business lending.”
Marketplace lending is increasingly drawing the attention of financial regulators both in the US and worldwide. At the end of April, the Consumer Financial Protection Bureau – a US government agency that controls how customers are treated by financial institutions –
and a number of other state regulators launched inquiries to investigate potential abuses and concerns within the industry. Illinois, New York and California are three examples of federal states that have simultaneously honed in on the marketplace lending space.
If marketplace lending in the US is to acquire a sector-specific set of regulations (as P2P platforms are subjected to in the UK), the emphasis will be on balance – with regulators seeking to protect customers, without stifling innovation. Watch this space.