Peer to Business Lending
Alternative Finance Sector Report - November 2014
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PEER TO BUSINESS LENDING
ALTERNATIVE FINANCE SECTOR REPORT
PUBLISHED
November 14
AUTHOR
Luke Jackson
Samantha Goins
UK CROWD FUNDING ASSOCIATION
(UKCFA)
The UKCFA has a strict code of conduct with a number of principles which are designed to work across both FCA authorised
and non-regulated businesses. All UKCFA members agree that the principles included in the code of conduct are important
to protect businesses and individuals. Firms must adhere to these principles to become members of the UKCFA. To ensure
that firms stick to these principles they are audited on an annual basis, to promote best practice, fairness and transparency in
the industry.
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THE PEER-TO-PEER FINANCE ASSOCIATION
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(P2PFA)
The P2PFA is the industry association for debt based alternative finance providers. Their membership covers over 95% of
the P2P lending market and most of the invoice trading market. In a similar vein to the UKCFA, they work to promote high
standards of business conduct and consumer protection across the sector and require members to abide by a set of rules and
operating principles.
P2PFA Members must meet the following criteria:
Undertake debt based retail financial services business in the UK by means of an electronic platform
Have been transacting business in the market for at least 6 months
Use lender funds to provide loan funding of any type to consumer or business customers
Preferably, secure some lender funds from retail consumers
Operate to a significant extent by means of direct loan contracts between borrowers and lenders
Demonstrate high standards of loan underwriting and credit and operational risk management
Demonstrate high standards of transparency and provide clear, balanced and fair information to all customers
Comply fully with the P2PFA’s Operating Principles, as amended from time to time, commit and adhere to high industry
standards for the peer to peer finance sector, agree to work with other members to promote the sector
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INTERNATIONAL REGULATION
US: P2P lending in the US is subject to SEC regulation and other state and federal regulation. In the US, P2P loan notes are
SEC registered securities.
Germany: Platforms need to use a bank; rates are capped at 2x average rate.
France: Need Credit License which takes 12-18 months (Key advantage for Prêt du Union, since it creates a barrier to entry).
Regulated by the French Central Bank.
Italy: Need to operate with banking/financial institution licence. Regulated by the Bank of Italy. Rates are capped.
SOURCE:
Liberum
