Peer 2 Peer Lending Warning


The FCA have written to all loan-based crowdfunding platforms to highlight its expectations on facilitating loans to lending businesses.

The Dear CEO letter explains that lending businesses that borrow through a loan based crowdfunding platform and then lend that money to others may be in breach of the Financial Services and Markets Act.

In addition, platforms that facilitate this activity are not meeting the requirements around facilitating loans to lending businesses and are not acting in a manner which is consistent with FCA expectations.

If the borrower does so without regulatory permission to accept deposits, this would involve a breach of FSMA and may be a criminal offence.

What actions the FCA expect from your firm now:

1)    Establish whether you have been facilitating loans via your platform to lending businesses who have lent that money to others who do not have the required accepting deposits permission;

2)    If so, stop facilitating the acceptance of deposits by these borrowers;

3)  Consider what action you will take to ensure that you do not facilitate the acceptance of deposits by any such borrowers who do not hold the correct permission in the future; and

4)   Consider what action you will take in cases where a borrower has already been accepting deposits via your platform and does not hold the correct permission.

 (Source: FCA)

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