View more on these topics

FCA warns P2P investors may not understand risks

FCA logo new 3 620x430

The FCA wants feedback on what to include in its upcoming review into crowdfunding rules, including around Innovative Finance Isas.

The review will consider both loan and investment-based crowdfunding.

The FCA is seeking feedback on whether investors are aware of the risks involved with innovative finance Isas.

The call for input document, published today, says: “There is anecdotal evidence that suggests [peer-to-peer] investors in the past were relatively wealthy or knowledgeable.

“The availability of P2P investment through Isas and pensions, or at retirement using money released from pensions, may create a change in the investor base toward retail investors who are less experienced or knowledgeable, who trust the Isa ‘brand’, and who may not fully appreciate the risks involved.”

The regulator also says P2P will be considered as part of its review of the Financial Services Compensation Scheme. Investors currently do not have access to the FSCS if borrowers fail to meet loan repayments or if a crowdfunding firm fails.

Due diligence, conflicts of interest and disclosure are also part of the call for input.

FCA strategy and competition director Christopher Woolard explains the regulator introduced rules on crowdfunding in 2014.

Woolard says: “Since then the market has grown rapidly and we want to explore concerns that have been expressed about developments in some aspects of the market. We believe now is the right time to consider whether our requirements remain appropriate and that we have the right rules to support the development of this dynamic market by ensuring consumers are adequately protected.”



Leader: There’s a reason for the kid-glove approach to P2P

Instinctively, I am wary about peer-to-peer lending. The idea is regular investors become like banks, lending out their own money to other members of the public. But if these are borrowers that traditional banks will not lend to, should Joe Public really be the one to step up to the plate instead? The P2P market […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm