This is a young and innovative market and we expect the Innovative Finance ISA, which launches on 6 April, to further increase consumers’ awareness of peer-to-peer lending (P2P). The FCA is keen to promote effective competition in this market. We are taking a proportionate approach to regulation, recognising the need for consumers to be adequately protected and have the information they need.
It is important that applications from firms wishing to be fully authorised are properly considered and that the firms meet rigorous statutory standards. 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. We have up to 12 months to reach a final decision.
We have received a lot of applications for firms wanting permission to operate a P2P platform. Our consideration of whether to authorise firms as P2P platform operators is against a backdrop of recent changes to legislation which clarify how operating a P2P platform fits with other regulated activities. These changes came into effect in January and mid-March 2016.
As at 30 March 2016, eight firms have been fully authorised to operate P2P platforms. There are a further 86 firms awaiting a decision, of which 44 have interim permission. Firms with interim permission were previously licensed by the Office of Fair Trading, which regulated consumer credit before the FCA, and are able to continue carrying out consumer credit activities until we decide whether to fully authorise them. Only P2P loans on platforms operated by firms with full authorisation will be eligible investments for the Innovative Finance ISA.
We are working closely with individual firms to ensure they meet the rigorous statutory standards and are authorised as quickly as possible.