The Financial Conduct Authority (FCA) has announced they have clamped down on peer-to-peer lenders as they are introducing new rules to protect investors.
The FCA said the new rules that has been introduced will “better protect investors” and allow lending platforms to operate sustainably.
The rules will ensure new investors “do not over-expose themselves to risk” however, the rules will not apply to those who have receives regulated financial advice.
P2P platforms like Zopa and Funding Circle are to now face marketing restrictions to protect those who are less experienced and new to investing.
Platforms that offer home finance products will now need to adhere to Mortgage and the Home Finance Conduct of the business sourcebook.
Christopher Woolard, executive director of strategy and competition at the FCA said, “These changes are about enhancing protection for investors while allowing them to take up innovative investment opportunities.
“For P2P to continue to evolve sustainably, it is vital that investors receive the right level of protection.”
P2P peers will have to implement the new restrictions by 9 December 2019, except for mortgage and home finance requirements which have been applied with immediate effect.
Yann Murciano, chief executive at P2P firm Blend Network said, “We believe the measures promise to be a positive step forward for P2P platforms.
“We believe these measures will have a significant positive impact on the P2P industry, particularly on the way that loan risks and platform business models are assessed.”