Aussie marketplace lenders measured up

By David Tuckwell on Thursday 1 June 2017

Alternative LendingSavings and Investment

Corporate regulator publishes study on industry size

ASIC sizes Aussie marketplace lending at $156 million, but its numbers are old.

The nine biggest Australian marketplace lenders wrote A$156 million in loans in the 2016 financial year, a new survey by corporate regulator ASIC has found. 

In an industry first, ASIC took in data from nine “entities” - marketplace lenders, broadly defined - in order to assess the depth of the market and create a snapshot of Australian marketplace lending.

“As a relatively new industry, it is important for ASIC to engage with and better understand the business models of marketplace lending providers,” said ASIC Commissioner John Price. 

“The survey responses have provided valuable insights into these businesses. We acknowledge and appreciate the participation of survey respondents.”

The report also noted the diversity of the business models on offer, how far the industry had come in a short period of time as well as noting that defaults and complaints were “very low”.

However, the report warned that conflicts of interest were inherent in some business models and urged executives to manage them.

“If most of the revenue is generated from loan origination, then the provider might have a stronger interest in origination of loans rather than ensuring existing loans are repaid,” the report said.

“This potential conflict may be amplified by the fact that the provider does not necessarily lend its own funds.”

“As [Australian financial services] licensees, marketplace lending providers must appropriately manage this type of conflict.”

Reacting to the report, Daniel Foggo, RateSetter Australia CEO, told AltFi that the data was “quite old” as it finished twelve months ago but was grateful for ASIC’s engagement. 

“I think it’s very positive that ASIC is deploying time and effort to look at the marketplace lending. I think we have a very strong regulatory environment in Australia.”

Danny John, director of communications at SocietyOne, also welcomed the report.  

“We’ve had a good and constructive working relationship with ASIC and we were closely involved in the guidance that they put out...but this doesn’t take into account the growth the sector has seen,” he said.

“When they publish their next report we believe it will show strong growth."

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