The chairman of the Peer-to-Peer Finance Association has denied the regulator’s setbacks in authorising platforms ahead of the launch of the Innovative Finance Isa have hindered the industry.
By the time the new Isa had launched in April, just eight out of 86 peer-to-peer lending platforms had been granted the necessary permissions to offer the savings vehicle, according to the industry body.
Heads of a number of lending platforms subsequently criticised the regulator and the government for their handling of the Innovative Finance Isa launch, arguing the whole process should have been paused while the Financial Conduct Authority worked through its backlog.
The FCA has recently announced review of the sector, looking at how well it is understood by consumers.
But speaking to FTAdviser, the P2P Finance Association’s chair Christine Farnish said the delays were not such a big deal, because investors’ money can be put into the Isa at any point.
“It’s just a question of a small amount of time in the overall scheme of things,” she said, adding Isas are designed to be a long-term savings product.
None of the eight members of the association – which include the likes of Zopa, RateSetter and ThinCats – have yet received full permissions from the FCA, despite it being more than three months since the launch of the Isa.
However, Ms Farnish said she expected “a number” of the member firms to receive approval next month.
The delays were partly a result of the FCA being made responsible for 30,000 consumer credit firms in 2014, and Ms Farnish said the peer-to-peer sector got “put to the back of the queue”.
“It has been a huge bulge of activity for the regulator and we could completely understand the FCA had to sort out consumer credit, because there had been a lot of controversy in that sector.”
When FTAdviser approached the regulator for a response to the impact of the delays, a spokeswoman for the FCA declined to comment.
She was also unable to give a timeframe as to when the platforms can expect authorisation.
Kevin Caley, managing director of ThinCats, said he does not expect approval to happen before the end of August, adding he guessed it “may well take quite a bit longer”.
“Under the circumstances this is to be expected and, although it is frustrating, we just have to live with it.”
Ms Farnish also talked about the FCA’s recently announced review of the sector, which is set to examine how well consumers understand the risks of peer-to-peer.
She said the review was not a surprise, adding it was “quite normal” to have a review when the regulator launches something new.
“So far, the evidence on consumer understanding for those who put money on the platforms suggests that 90 per cent of consumers understand what the risks and rewards are with peer-to-peer lending.