Advising on P2P agreements

Find out more about the new permission for the regulated activity of ‘advising on P2P agreements’ and what this means for your firm’s permissions

Firms that currently hold permission for the regulated activity of ‘advising on investments’ automatically had their permissions varied to add the new regulated activity of ‘advising on peer to peer (P2P) agreements’ from 6 April 2016. This includes:

  • firms that hold the permission, but for whom providing advice is not their primary business, eg general insurance intermediaries
  • firms that hold the ‘advising on investments activity in respect of non-investment insurance contracts’

Cost of keeping the permission

Firms automatically receiving the new permission will not pay additional FCA regulatory fees for holding the P2P advice permission, unless they earn income from that business. This is the same approach as is taken for all other types of investment business.  

However, firms who do not undertake designated investment business will be subject to an additional fee in relation to the Financial Ombudsman Service. This is currently £45 and will not be charged until the 2017/18 financial year.

Impact on regulatory reporting

There are no additional reporting requirements envisaged at this time. Any income earned will be included within investment income.

Our expectations

Firms must, among other things, take reasonable steps to ensure that personal recommendations are suitable for their client. As set out in our Policy Statement on segregation of client money on loan-based crowdfunding platforms, the Innovative Finance ISA, and the regulated activity of advising on peer-to-peer agreements​ (PS16/8), this requirement will extend to personal recommendations in relation to P2P agreements from 6 April 2016.

Our rules on assessing suitability can be found in our Handbook at COBS 9.

Removing the permission

If you decide that your firm is not going to advise on P2P agreements now or in the future, and would like to remove the permission, you can submit a variation of permission application through Connect.

There is no cost to you if you wish to remove this activity. However, if in the future your firm decides that it would like to re-add the P2P advice activity, the standard variation of permission application will need to be completed through Connect. For most firms, this will cost £250.

Background

In the 2014 Budget, the government announced that it would introduce the Innovative Finance ISA (IFISA), which would allow for P2P lending agreements to be included within an ISA tax wrapper. At the same time, advising on P2P agreements would become a regulated activity.