A slightly longer post on Regulation
The Regulators
Last Thursday, Lord Leveson published his long-awaited recommendations on future regulation of the press. Much was made of “statutory underpinning” and the level to which legislation should clarify the rights and wrongs of how the press should operate. The press – as one might expect – has been crying bloody murder at the risk of having their power curtailed.
In the world of peer-to-peer, we exist at the opposite end of the spectrum. We welcome the prospect of legislation that would give us the ability to become a regulated entity, putting us on a level playing field with other financial services. It would enable us to participate within an accepted framework and be accepted as a credible sector in the financial world. From there, we can truly disrupt.
Over the last 12 months, we have proactively knocked on the door of Government and regulators – together with our industry colleagues – asking them to consider peer-to-peer as an industry worthy of some attention. The general response, from legislators and regulators alike, could be described as “intrigued but non-committal” – their view was that peer-to-peer was a fascinating alternative to traditional models but needed to demonstrate more growth and scale before it was a candidate for formal regulation.
So it was with some surprise that we were informed by the Treasury this week that the Government is committed to pursuing regulation of the P2P industry in the forthcoming Financial Services Bill and that peer-to-peer lending will become a “regulated activity” in April 2014. Our surprise was not that the Government thinks this is a good idea but that we had managed to effect change in a relatively short period of time!
We believe this is fantastic news for the peer-to-peer industry and for its customers: it is evidence that the government thinks we are a credible model which allows consumers and businesses to benefit; it is support for the self-regulatory activity that we have undertaken that sets out to ensure consumers are protected; it opens the door, in the longer term, to create regulated and tax-efficient products based on peer-to-peer lending. The P2P ISA, anyone?!
Thank you to everyone who has offered their insight and feedback on this topic.
As always please let us know your views.
This is great news on the basis it will lead to ISA wrappers for P2P lending. This will certainly encourage me, and many others, to reinvest in Ratesetter (& P2P more generally) since my returns will not have to factor in the HMRC contribution. This will enable me to accept lower returns on a par with current non-tax payers.
Well done to Ratesetter and your colleagues in the P2P industry for getting this moving so quickly.
Good news that HM Treasury have recognised RateSetter and P2P generally. Well done for moving so quickly on self regulated activity.
I do hope any regulation is helpful and beneficial offering protection rather simply layers of costly red tape. Number 1 on the list for any P2P representation should be for HMRC to allow losses to be offset against income.
Number 1 on my list would be that the quid pro quo for regulation would be inclusion of P2P within the Financial Services Compensation Scheme – is that on the cards?
This is the main thing holding back my greater investment in P2P (taxation rates being the second – would be great if P2P can be ISA-ed).
This should clear up the cowboys. Having been burned by another peer to peer lender, that was lending loans and then selling the loans to the unsuspected as they were going bad… this is a very welcome move.