FCA rules overhaul should give brokers and borrowers more confidence in P2P – Assetz Capital

The regulator announced significant changes to rules governing P2P platforms on Monday, with home finance platforms forced to implement the Mortgage Conduct of Business Sourcebook (MCOB) immediately.

This move has been welcomed by Assetz Capital director of intermediaries Damien Druce, who told Specialist Lending Solutions he believes it will benefit the sector in the long term.

“The rules the FCA wants to apply are sensible and they have the potential to expand the people that are attracted to P2P because I think those safeguards will give them a bit more confidence,” he said.

“We don’t have the benefit of Financial Services Compensation Scheme (FSCS) protection so these extra safeguards from the regulator should invoke a bit more investor and retail confidence and actually it could give greater certainty to intermediaries and borrowers.

“So, I welcome them, embrace them and encourage brokers and intermediaries to not worry and remain open-minded.

“P2P has come a long way in a short space of time and hopefully this will allow us to go on for an awful lot longer and consolidate our position in the lending market,” he added.

Lendy collapse

Last month saw the collapse of Lendy into administration and it appears many of the FCA’s rule changes have been drawn-up with the firm’s demise in mind.

Druce agreed the Lendy situation was a significant concern, but reiterated that one operator’s poor performance did not apply across an entire sector or market.

“The level of defaults that apply in one loan book won’t be replicated in another,” he continued.

“We don’t have these issues, our loan book is transparent, we are very transparent as a business about how we publish our credit reports as a business and how we come to a lending decision.

“We’re very up front and because of that, applying the right credit risk principals to ensure what we’re taking on is the right thing for our investors,” he added.

No MCOB concern

And Druce was also not concerned about the immediate introduction of the MCOB regime for the business.

“There’s nothing in there that gives us any real fear, nothing that we can’t work with and can’t make the best of going forward,” he said.

“Overall the new rules and guidance, once implemented and bedded-in, should just make things better for investors and borrowers.”

Druce admitted the introduction of investment limits for new investors was a slight disappointment, but noted that it provided an extra level of protection.

“If that limit attracts more people to P2P, it has the potential to be a good thing.

“While we regret it, it’s not an ideal place to be, but we’ll work with it and hopefully it’ll have a positive long-term impact,” he concluded.

Six years’ funding

The lender also announced that it has provided more than £100m in bridging finance and a further £50m in SME funding.

It has supported 3,700 homes to be built or developed in its six years and lent more than £780m to small businesses.