Regulation has narrowed the range of P2P products
The Financial Conduct Authority’s (FCA’s) regulation of the peer-to-peer lending sector has narrowed the range of products available and may have “fatally undermined” the retail P2P investing model, a compliance expert has claimed.
James Black, a partner at fintech-focused law firm Hogan Lovells, told Peer2Peer Finance News that FCA regulation has come “at the cost of having a vibrant and buoyant sector.”
Read more: P2P firm censured under financial promotions rule
“It is now a concentrated sector with a narrower range of products in the market,” said Black.
“The sector is now better from a consumer protection and market integrity perspective. It feels a bit like the FCA is throwing out the baby with the bathwater though and it has perhaps fatally undermined the retail P2P lending model.”
Hogan Lovells was one of the first law firms to work in the P2P space, having advised Zopa on its entry to the market in 2005.
Read more: Regulation special report: Status: It’s complicated
Black noted that P2P has changed “enormously” since then, with FCA regulation playing a huge rule in the evolution of the sector. However, he remains positive on the future of P2P.
“There are definitely opportunities,” added Black. “In the economy that we live in there is always a need for funding so there will always be borrowers looking for a good deal and there will always be people looking for a return on cash.
“The P2P lending concept is still a really good one, it is the execution and regulation that has perhaps kept it down.”
Read more: FCA bolsters whistleblower processes
