The Financial Conduct Authority (FCA) has revealed that 86 companies are awaiting a decision on whether they will be authorised to operate peer-to-peer lending platforms.
In the update, the regulator also revealed that 8 firms have been approved so far.
Peer-to-peer lending is a financial technology (fintech) success story. Such lending platforms offer an alternative to banks, with investors providing capital and online IT platforms matching up lenders with borrowers.
The FCA said it has received a large number of applications from firms that want to become authorised peer-to-peer lenders and each application can take up to 12 months to process.
“It is important that applications from firms wishing to be fully authorised are properly considered and that the firms meet rigorous statutory standards,” said the FCA.
“How long it takes to consider an application depends on a number of factors, including the completeness of the application, the complexity of the business and the firm’s demonstrated compliance with regulatory requirements.”
The FCA said 44 of the 86 companies have interim permission to operate because they had been approved by the Office of Fair Trading.
Read more about alternative finance firms
- Peer-to-peer lending accounted for more than £1.2bn of UK loans in 2014, with confidence growing among businesses and individuals in IT-enabled access to credit.
- Cloud-based UK peer-to-peer lending platform MarketInvoice is moving to a Microsoft Azure-based platform as a service (PaaS) to cope with demand.
- Internet giants will not try to replace banks, but will disrupt the sector through services that take consumers away from traditional banks, says Forrester.
According to the recent Pushing Boundaries – 2015 UK Alternative Finance study from Cambridge Judge Business School, the peer-to-peer lending sector in 2015 saw increased involvement from institutional investors. This accounted for 32% of loans in peer-to-peer consumer lending and 26% in peer-to-peer business lending.
But there are concerns about the sector. Former FSA chairman Adair Turner recently said he is worried that there are no checks on whether the individuals and businesses who borrow will be able to pay back their loans.
“In particular, you cannot lend money to small and medium-sized enterprises without somebody going and doing good credit underwriting,” he said. ... ... ... ... ... ...