The FCA is planning to crackdown on the industry. Much tougher rules are proposed following concerns that investors are taking on much more risk than they realise. The FCA are concerned that a rise in interest could trigger defaults on higher risk loans on these platforms.
The changes are needed to give the retail investor better protection. To this end, the FCA has issued a consultation paper.
If you have had poor experience – please share this with the FCA – it will help provide better protection to other investors in the future.
The paper covers
- proposals to ensure investors receive clear and accurate information about a potential investment and understand the risks,
- ensure investors are adequately remunerated for the risk they are taking,
- transparent and robust systems for assessing the risk, value and price of loans,
- fair and transparent charges to investors,
- promote good governance and orderly business practices
- proposals to extend existing marketing restrictions for investment-based crowdfunding platforms to loan-based platforms
The FCA are also committed to addressing a potential gap in protections for customers buying a mortgage or taking out a home finance product through loan-based crowdfunding. They are proposing to apply rules which would normally apply to home finance providers, to P2P platforms where at least one of the investors is not an authorised home finance provider.