Advisers have a year to decide whether they want to opt-out of providing advice on peer-to-peer lending agreements, the Financial Conduct Authority has said.
As of today (6 April), all financial advisers with permission to advise on investments have also been given permission to advise on P2P agreements.
The regulator has contacted these firms to inform them of the change and to let them know of the deadlines for opting-out of this permission.
Today also saw the government officially introduce the Innovative Finance Isa, which allows P2P agreements to be included within an Isa tax wrapper.
Advising on P2P agreements has also become a regulated activity.
A spokesman for the FCA said a simplified way of opting-out will be available on the regulator’s website until 6 October, but advisers can opt out until the beginning of the next financial year.
There will be no fee implications for this added permission until the 2017/18 financial year.
The FCA stated: “If a firm decides it is not going to advise on P2P agreements now, or in the future, and would like to remove the permission, they can complete a short variation of permission form and send it to P2Padvice@fca.org.uk.
“There is no cost to if a firm wishes to remove this activity.”
The spokesman added that advisers who are concerned about how the new permissions might impact their PI insurance should speak to their provider.
In February, the FCA said advisers will not be able to charge commission on P2P lending agreements.
The regulator has already said firms holding themselves out as independent should not be obliged to consider P2P agreements when recommending retail investment products to a retail client. It has also said it was not applying the appropriateness test to P2P agreements when sold on a non-advised basis, but this is something it may revisit in the future.
Last month, concerns were raised that advisers will be unable to comply with the FCA’s requirements on P2P due diligence. This was because of the difficulty in being able to measure risks associated with P2P agreements.
Adviser view
Jason Witcombe, director of London-based Evolve Financial Planning, said: “We have not reached a decision about whether we will opt-out of our P2P permissions.
“We will be treading very carefully with P2P. The more something is marketed as an alternative to deposits, which I think P2P is often marketed as, consumers may well put two and two together and think it is the same thing, which it is not.
“The effect on our PI insurance will have a big role in our decision.”
