Those that have not, do so at their own peril.
Should a review identify concerns or regulatory shortcomings, the best thing a P2P lender can do is put in place a comprehensive program of remedial work that addresses the FCA’s concerns about the sector, particularly in relation to safeguarding investor cash.
Such a move will not only serve to protect P2Ps from adverse regulatory engagement but also actively strengthen the reputation of the P2P lending sector as a whole.
Alternative lenders share the market with larger and more established players (and their subsidiaries) that will have the resources, reputation and legal expertise to deliver services with a lower degree of regulatory risk.
Consequently, smaller and less well-resourced firms are likely to be the focus of any individual regulatory engagement.
The FCA’s letter should be viewed as a call-to-action for all firms.
To be certain that the regulator will not find the need to come knocking, firms should aim to comply with both the details and the spirit of the letter, as well as the FCA's other communications and actions to date.
Born out of the financial crash of 2008, the P2P market was founded on the premise of businesses being able to obtain equitable and responsible credit at a time when the lending environment had tightened.
Many P2P lenders are following a path to success, with strong investor interest, competitive interest rates and the ability to make bolder investment choices than traditional investors.
Noline Matemera is a partner in the financial services team at UK law firm TLT, and an expert in financial services regulation