FCA bans skin in the game

That would surprise me.

... plus the sudden tsunami of loan parts being unloaded that FC have already bought! Think of the children! secondary market!

That rule may be a smack on the bum for Wellesley - "skin in the game" is a fundamental part of their USP.

(and Broadoak/MT for that matter)

I trust more a platform which is ready to risk their own money. Why should FCA ban such a thing? On MT, BroadOak take the first loss if I remember well. There might be other examples too.

A potential reason would be concerns about the solvency of the platform and concerns that it might fail and cause the failure-related recovery processes to be needed.

Another potential concern would be platforms that invest money intended to protect investors in loans on the platform, for example the recent RateSetter events where the protection fund did so to help big loans get filled as well as to make interest on them. A prohibition on money intended to protect investors from leveraging up the risk by investing in the same platform seems like a sensible move.

Another potential reason might be anti-competitive moves by some platforms, to harm platforms that do this as a routine part of loan funding work by getting regulation that harms the upcoming competition. Some do the initial funding themselves then resell to ultimate lenders. SavingStream and MoneyThing are two examples that could be harmed.

Another potential reason might be anti-competitive moves by some platforms to harm platforms that use their own funding of parts of loans as part of the protection of investors who use the platform, with the platform taking first loss. Wellesley, for example, is structured in this way. Simply desiring to undermine alternative ways of protecting investors can be a sufficient reason to want harmful rules to be imposed.

Lest anyone think that it might be anything to do with the P2PFA, note that its rules do permit members to lend money on their own platforms, provided that conflicts of interest are effectively managed.

For anti-competitive above also just substitute regulators who may not be aware of the breadth of ways that platforms operate and might not even have known that it could harm some of the most promising up and coming platforms. No need for conspiracy when ignorance can do the job, though it is worth being aware that regulation and law are tools used in competitive environments.

Some skin in the game is desirable and is being seen for example in rules for US mortgage lending that will ban selling 100% of a mortgage, so that the loan originators will suffer a loss if they do not propose sensible borrowers. This as a partial remedy for the irresponsible lending issues that contributed very substantially to the events in 2008.

I look at say Bondora and wonder just how their moves into new markets would have been affected if they, not just lenders, were suffering directly from the extreme default rates encountered in new markets and how that may have prompted them to modify how they did this before investors had suffered so much.

So yes, I agree that it is desirable for platforms to have a non-trivial amount in the loans, as well as remuneration of senior management linked to loan performance for lenders.

However, it's really for whoever made that assertion in the Rebs discussion to explain the basis for it.

I've asked REBS two different ways now for clarification, let's see

I will get Chapter and Verse on why we had to stop our Catalyst scheme and post it here.