By Daniel Lanyon on Monday 9 December 2019
New regulation going live today means tough new rules for lending platforms.
Lewis, who founded RateSetter in 2010 and has kept retail investors as the firm’s core funding channel whilst others have moved to a mix of institutional funding alongside retail money, is upbeat.
“We will look back on this as a watershed moment for our industry – the moment that peer-to-peer investing came of age as an asset class, competing against other mainstream investment options and the banks as an attractive way to put money to work,” he said.
“Stronger regulation with harmonised standards means that people can invest in P2P with greater confidence than ever. P2P will now become a logical choice for any individual or financial adviser building an investment portfolio diversified across different asset types,” he said.
The new rules most importantly outline that P2P investors should have no more than 10 per cent of their portfolios in the asset class.
‘[This] is a sensible place to start and once you are experienced you can invest more. This is exactly what we have seen over the last ten years, with people dipping their toe in and then growing as they see the value. The limit will become a target, encouraging every investor to think about diversifying some of their money into P2P,” Lewis added.
The more stringent rules also aim to raise standards in risk management, governance, disclosure, marketing and wind-down planning.
“These changes are about enhancing protection for investors while allowing them to take up innovative investment opportunities. For P2P to continue to evolve sustainably, it is vital that investors receive the right level of protection.”