More P2P regulation is “wrong move” declare bosses, who say loan defaults during pandemic have been limited

By John Reynolds on Thursday 12 November 2020

Alternative Lending

Natasha Wear, peer-to-peer CEO at Zopa, and Stuart Law, CEO of Assetz Capital, say they welcome current P2P rules but they have gone far enough.

More P2P regulation is “wrong move” declare bosses, who say loan defaults during pandemic have been limited
Image source: Stuart Law and Natasha Wear speaking at the AltFi Festival of Finance.

Further regulation of the peer-to-peer industry would be a “wrong move” according to Zopa and Assetz Capital bosses, who said their businesses had seen only limited loan defaults during Covid-19.

Natasha Wear, peer-to-peer CEO at Zopa, and Stuart Law, CEO of Assetz Capital, were speaking yesterday at AltFi's Festival of Finance.

The FCA has introduced new rules on governance, risk management and other areas in the peer-to-peer industry, as it looks to protect investors and identify bad actors across the sector.

On regulation of the sector, Wear said: “It really has ramped up, the level of scrutiny that has been on peer-to-peer firms.”

“I guess in some areas it was really needed in terms of standardising disclosures, making sure you are doing the right risk management and you have got the right governance in place to protect investors.”

Wear said Zopa was supportive of the rules.

She added: “In our mind, our feeling is kind of it’s gone far enough. I think the feeling is it’s kind of at the right level now.”

On further regulation, Law added: “I think that will be the wrong move.”

“The opportunity now is to ensure that the current regulation is being applied by firms properly and correctly. That is where the opportunity sits.”

Law and Wear also discussed P2P loan defaults this year during Covid-19. Wear said the number of defaults had been lower than in previous years.

She said: “Because of the payment freezes that we have put in place for those borrowers who were most impacted by Covid, we have actually had lower default levels this year than in a normal year.”

She said this was because “everything had been pushed out.”

She added that the proportion of those on payment plans and payment freezes was going down, as they moved back to normal payments, despite the second lockdown.

“At the peak, we had about just over 10 per cent on some sort of collections or kind of payment plans and now that is down to four per cent today,” she added.

Law added that Assetz Capital's lender support measures had helped counter default levels.

He said: “We are still not seeing any substantial numbers of defaults at the moment. We expect many of those to wash through.”

On likely defaults next year, Law said: “We are not seeing a large elephant in the room that is obviously identifiable for that.”

“There are some challenges ahead but we are not seeing any kind of Armaggedon at all in the default and loses scenario.”

Law said that government support measures, including the furlough scheme and various government-backed loans, had proved crucial to stopping firms going bust during the pandemic.

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