FCA warns P2P lenders and crowdfunding platforms
The UK financial regulator has fired shots across the bows of a number of fintechs offering equity crowdfunding and peer-to-peer lending
The Financial Conduct Authority, the UK’s financial regulator, has written crowdfunding and peer-to-peer lending platforms outlining its concerns about how the industry abides by regulation.
In particular, in two separate letters to the boards of investment-based crowdfunding and loan-based peer-to-peer lending platforms, respectively, the FCA referenced the new Consumer Duty rules whereby firms must act in the best interests of retail customers.
“We have today written to loan-based peer-to-peer lending firms and investment-based crowdfunders setting out our expectations on the key issues we want to address in these sectors,” Lucy Castledine, director of consumer investments at the FCA, said.
“This includes ensuring these firms are meeting their obligations to investors under the Consumer Duty, that they are complying with our new financial promotions rules for high-risk investments, and that they are financially resilient to potential shocks,” she said.
“We expect firms to work with us to address risks in the market and to protect consumers, and we will not hesitate to act where we have concerns,” she added.
While the FCA has previously conducted a review in December 2022 of the fintech sub-sector, of firms' risk warnings of firms where it "found that the level of compliance was far below the standard we expect", this is the first more robust use of the new Consumer Duty rules.