Competition regulator confirms P2P business lenders exempt from APR rules
NEW pricing rules on business loans will not apply to peer-to-peer lenders, the Competition and Markets Authority (CMA) has confirmed.
From today, all providers of unsecured loans and overdrafts worth up to £25,000 to small- and medium-sized enterprises (SMEs), will have to publish and clearly display the annual percentage rates (APRs.)
It had previously been unclear if this would apply to P2P and alternative finance lenders but the CMA confirmed to Peer2Peer Finance News this morning that it would not.
Read more: Loan applicants misled by teaser rates
Conrad Ford, chief executive of finance aggregrator Funding Options, said he was surprised P2P and alternative finance firms were excluded.
“It is extraordinarily difficult for SMEs to compare finance so this is a welcome step,” he said.
“But leaving out P2P risks making the remedy meaningless as it will still make it hard for comparisons of costs to be made.
“I wouldn’t be surprised if P2P lenders voluntarily display their APRs.”
Read more: UK P2P market ripe for business loans
Legal experts also expect P2P firms to follow the rules so they can keep up with the competition.
“Whether it applies or not, P2P lenders will come under market pressure to display the APR,” Jonathan Segal, head of fintech at law firm Fox Williams, said.
“It will be a commercial decision so they can keep up.
“The alternative finance argument is that they are dealing with people who can’t get a loan from a bank but clearly they would love more of the prime market. Now they can only get that if they are on parity with the banks.”
Read more: Increasing numbers of Brits backing European P2P loans
