Rebuildingsociety says consumer duty is pivotal for P2P lending
Rebuildingsociety has said that the principle of consumer duty is “at the heart” of the platform and “plays a pivotal role in building a transparent and responsible peer-to-peer lending ecosystem.”
The P2P business lending platform’s comments come after the Financial Conduct Authority’s new Consumer Duty was introduced at the end of July, mandating regulated financial services firms – including lenders – to put customer’s needs first. The Duty aims to set higher and clearer standards of consumer protection.
“At the heart of the Rebuildingsociety.com community lies the principle of consumer duty,” the firm said. “Borrowers, lenders and the firm each bear a responsibility to ensure the success and sustainability of the platform.”
Read more: Consumer Duty could lead to stricter lending criteria
Rebuildingsociety said it provides borrowers with a clear understanding of loan terms, fees, and risks, enabling them to make informed decisions. Likewise, investors have access to comprehensive information about borrowers, helping them assess the risks and rewards associated with each investment.
“As a responsible P2P lending platform, Rebuildingsociety.com complies with relevant financial regulations and industry best practices,” it said. “The platform’s adherence to regulatory guidelines reinforces consumer protection and enhances trust among participants.”
The firm said its borrowers have a duty to be transparent about their financial position, business plans and intentions for the loan during the application process. They also need to borrow responsibly and communicate effectively with investors and the platform.
Read more: Consumer duty milestone approaches: Are P2P firms ready?
Rebuildingsociety also outlined the ways that it supports investors. It highlighted the due diligence is carries out on every borrower and then provides clear information for lenders so they can make their own decisions.
“Understanding the borrower’s creditworthiness, business model, and past performance helps in making prudent investment choices,” it said.
Additionally, the business lender highlighted the importance of diversification.
“Consumer duty involves responsible investing,” it said. “Rebuildingsociety.com encourages lenders to diversify their investments across various loans to spread risk effectively. The platform also provides a variety of tools and information to help lenders easily facilitate this and to reduce their exposure through tools such as the BuyBack Guarantee. This approach helps in mitigating the impact of any potential defaults.”
And finally, Rebuildingsociety said that it supports responsible borrowers throughout the loan term, assisting in refinancing loans or applying a suitable forbearance strategy when businesses are struggling to make repayments so as to protect lender returns.
Read more: Two thirds of Brits doubt transparency of financial services firms
“By embracing transparency, responsible borrowing and diligent investing, participants can contribute to the long-term success of rebuildingsociety.com,” it said. “Together, let us uphold our consumer duty, support responsible financial practices, and build a brighter future for borrowers and investors on this thriving P2P lending platform.”
