Lendermarket applies for crowdfunding licence from Central Bank of Ireland
Lendermarket has applied for a crowdfunding licence from the Central Bank of Ireland as it seeks to become regulated under the new European Crowdfunding Service Provider Regulation (ECSPR).
It comes amid a push to onboard new loan originators, as the Dublin-based peer-to-peer lending platform continues its expansion.
Tara Cantwell, legal and compliance manager at Lendermarket, believes that the ECSPR will help to boost the profile of P2P lending across the EU.
“We definitely view the ECSPR as a benefit to the P2P lending market as it allows Lendermarket and other P2P platforms to more seamlessly develop and offer their services across national borders,” Cantwell says.
“Our investors are provided with an increased level of protection and guarantees.
“We are currently seeking our crowdfunding licence from the Central Bank of Ireland. We are covered under the transitional period which applies to those crowdfunding service providers who were providing a crowdfunding service within the state prior to regulation (EU) 2020/1503 entering into force on 10 November 2021.”
Read more: Lendermarket platform value hit €29m in 2021
These transitional arrangements allow crowdfunding service providers to continue to provide crowdfunding services included within the scope of the regulation until 10 November 2023.
Lendermarket has plenty of existing experience working with foreign regulatory requirements. Its loan originators are based all across the world and each new originator has to go through various stages of due diligence before their loans are listed on the marketplace.
“Initially, a preliminary review is made by filling in a questionnaire to establish certain details such as an overview of their lending products, loan portfolio and loan parameters,” explains Cantwell. “This stage is completed to better understand the loan originator’s operations and appetite for funding from Lendermarket and its investors.”
Read more: Lendermarket seeks new loan originators
Next, the legal and compliance team conducts research on the company and validates the corporate information. This phase is conducted in line with EU crowdfunding regulations, as well as general anti-money laundering and ‘know your customer’ industry standards.
“Lendermarket then inspects the loan originator’s financial situation,” adds Cantwell. “Several things are evaluated including the company’s financial statements, their loan portfolio and satisfaction with the company’s risk and forex hedging policies.
“Only after the due diligence procedures are completed, and Lendermarket is satisfied with moving forward, are the legal agreements drawn up. These agreements include setting covenants and finalising terms and conditions that must be met while the loan originator receives funding from Lendermarket’s investors.”
As the ECSPR is adopted by platforms across Europe, Cantwell believes that the new rules will lead to an increase in P2P lending across the EU, “especially considering the additional investor protection that the regulation requires”.
Read more: Lendermarket investors earn €10m in interest
“We hope this leads to increased investor confidence and therefore increased lending activity across the EU,” she adds.
However, there is more to do in order to safeguard investors and promote P2P lending across the continent. Cantwell would like to see limitations placed on the amount of personal loans that a borrower can obtain – a law which has existed in Thailand and other Asian countries for several years.
“Increased limitations on the amount of loans an individual borrower can be granted could be a good introduction to the ESCPR,” she says.