March against FCA failures 24th May

For what it’s worth, albeit late, the FCA has done a good job with the post-implementation review which came into effect December 2019. Many P2P investors joined the sector before it was regulated, and these failures would likely have occurred without regulation. I remember in 2015, we lost a bunch of lenders to Lendy, who were promising better returns. I tried to encourage my customers not to abdicate their lending decisions to Lendy because investor over-confidence would lead them to take risky decisions.

There's an interesting paper on why P2P platforms fail here:

link.springer.com/article/10.1007/s10660-021-09489-6

It’s based on Israeli firms, but same applies. Fundamentally, there comes a point where a platform is incentivised to under-price risk, they go through a period of growth before defaults manifest. As they lose investor confidence, income diminishes and if confidence is not regained (or costs not appropriately managed) the platform fails.

Venting at the regulator will delay the regulation of crypto, leading to further public losses. You only hear about the major rug-pulls, hacks and fraud when covered in the press about the major cases, but if regulation came in you would hear a lot more about it simply because the regulator would be expected to deal with it. In time they would, but regulating innovative financial services is hard.

The banks are safe because they are subsidised with FSCS, BounceBack, CIBLS and RLS which have rewarded the banks while transferring the risk to the government.

We have a high expectation of our regulator because they generally do a decent job. In many countries, regulation doesn’t necessarily lead to the same protectionist expectations.

I’m sorry for those of you who lost money. There is more to it than looking for the best advertised rates.