Call for input to the post-implementation review of the FCA
Jul 8, 2016 17:07:30 GMT
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SteveT and locutus like this
Post by ablrateandy on Jul 8, 2016 17:07:30 GMT
Focusssed on maturity mismatches it seems.
"The UK’s financial watchdog is probing the £2.7bn crowdfunding sector for the second time in two years, following widespread calls for tougher regulation of so-called “alternative finance” providers.
On Friday, the Financial Conduct Authority said it would scrutinise the burgeoning sector to find out if consumers who lend and invest money on peer-to-peer and similar crowdfunding platforms understood the risks they were taking — especially as the industry attracts more “retail investors who are less experienced or knowledgeable”.
According to the regulator, one of the systemic risks posed by P2P platforms is a “maturity mismatch”: between the three-to-five-year terms of the loans people make, and the promise to return their cash within 30 days if needed.
It was possible that platforms could “only repay investors if they have money of their own available”, the FCA warned, adding this “might also transfer risk from investors who leave platforms to those that stay on”.
P2P lending and crowdfunding became subject to FCA regulation in 2014 and Friday’s announcement — of a post-implementation review of the rules — follows growing political pressure for more scrutiny.
Last month Andrew Tyrie, the chairman of parliament’s Treasury Committee, wrote to the FCA to warn that “poorly informed investors may be left with a false sense of security about the balance of risks versus returns”.
"The UK’s financial watchdog is probing the £2.7bn crowdfunding sector for the second time in two years, following widespread calls for tougher regulation of so-called “alternative finance” providers.
On Friday, the Financial Conduct Authority said it would scrutinise the burgeoning sector to find out if consumers who lend and invest money on peer-to-peer and similar crowdfunding platforms understood the risks they were taking — especially as the industry attracts more “retail investors who are less experienced or knowledgeable”.
According to the regulator, one of the systemic risks posed by P2P platforms is a “maturity mismatch”: between the three-to-five-year terms of the loans people make, and the promise to return their cash within 30 days if needed.
It was possible that platforms could “only repay investors if they have money of their own available”, the FCA warned, adding this “might also transfer risk from investors who leave platforms to those that stay on”.
P2P lending and crowdfunding became subject to FCA regulation in 2014 and Friday’s announcement — of a post-implementation review of the rules — follows growing political pressure for more scrutiny.
Last month Andrew Tyrie, the chairman of parliament’s Treasury Committee, wrote to the FCA to warn that “poorly informed investors may be left with a false sense of security about the balance of risks versus returns”.
