RegulationAug 11 2015

‘Can FCA cope with surge for P2P approval?’: Bovill

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‘Can FCA cope with surge for P2P approval?’: Bovill
ByDamian Fantato

The FCA may struggle to cope with a rush of firms seeking approval, just as the chancellor opened the door to allow Isa investments in peer-to-peer lending, data from Bovill has found.

In the 2014 Budget, the chancellor announced that the government would make peer-to-peer loans eligible for inclusion within Isas, and launched a consultation which closed on 8 July 2015.

Legislation is expected to allow peer-to-peer loans to be held in an Isa from 6 April 2016.

However, the financial watchdog has been inundated with applications from P2P lenders seeking full authorisation.

According to regulatory consultants Bovill, the FCA received 114 applications from P2P lenders seeking full authorisation since the start of April 2014, when the regulator took responsibility for the consumer credit industry.

So far the FCA has authorised seven P2P lenders.

Gillian Roche-Saunders, head of venture finance at Bovill, said: “The FCA has its work cut out for it to meet the current wave of demand from the P2P lending sector. It’s difficult to see how the FCA can be expected to authorise such a large number of firms in a timely manner.”

Right to reply

A spokesman for the FCA said: “We have put in place a plan to authorise around 50,000 consumer credit firms that the FCA took over the regulation for in April 2014.

“Those firms previously regulated by the Office of Fair Trading have interim permission. That means that while they go through the authorisation process, they can continue to trade.

“As our business plan and annual report make clear, we have put aside significant resources for consumer credit.”