P2P firms ready for consumer duty

Regulated firms have until the end of July to comply with the Financial Conduct Au­thority’s (FCA’s) con­sumer duty rules but peer-to-peer lenders argue many of these policies are already embedded in their businesses.

The consumer duty mandates firms to pro­vide more clarity on their products and services, rather than burying key information in lengthy terms and conditions.

Firms will be required to test and show that their communications are clear and that consumers are receiving good outcomes.

It will apply to existing products and services from 31 July 2023 and be extended to cover prod­ucts and services in ‘closed books’ from 31 July 2024.

Read more: FCA’s Sheldon Mills heralds consumer duty as catalyst for innovation

P2P lending executives argue that their consum­ers already get clearer treatment compared with traditional financial services brands, particu­larly as platforms provide statistics and regular outcome statements.

“We applaud the mod­ifications that the FCA has suggested through the consumer duty,” a Kuflink spokesperson told Peer2Peer Finance News.

“Consumers’ best interests are Kuflink’s main priority. Our work on the consumer duty has already begun, and one of the adjustments is making our documents more user-friendly.”

The platform said it has conducted customer surveys since 2021 and has done a complete operational review with the consumer duty fully in mind.

Read more: FCA: New consumer duty will affect authorisations

“Within our business, we have already incorpo­rated customer input and seen excellent results,” the spokesperson added.

“We also pay great atten­tion to how our products and services are under­stood by consumers, and we use consumer surveys as a technique for evalu­ating this result. We think that in these testing times, all businesses should integrate consumer welfare as its core objective.”

Ben Shaw, founder of HNW Lending, said his platform has always tried to be clear and trans­parent with lenders.

“For example, we give a clear creditworthiness report for every loan and a copy of the valuation to all lenders as well as important metrics about the loan, such as its loan to value and the directors first loss tranche,” he said.

“The FCA’s recent communications have pointed to areas where we have improved the clarity or disclosure of what we say to investors, for example around our Innovative Finance ISA and this can only help to strengthen consumer’s confidence about invest­ing into loans with us.”

Last month, City of London minister Andrew Griffith was reportedly critical of the consumer duty, arguing that it could be harmful to the financial services sector.

According to The Financial Times, he is worried that the new rules come as the Treasury is trying to relax other City rules in a bid to heighten post-Brexit opportunities.

He is also reported to want to avoid a “compensation culture” arising from the changes.