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The FCA puts P2P firms on notice

October 4, 2019

What happened?

The FCA has sent a letter to more than 60 peer-to-peer lenders warning them to fix alleged poor practice or face a major crackdown. Possibly stung by negative publicity around its handling of failed P2P firm Lendy, the regulator now has peer-to-peer platforms very much in its sights.


Lendy went into administration in May this year, with a reported £165m of loans outstanding. After been promised returns as high as 12% on a range of property ventures, around 20,000 investors now risk getting badly burned and are reported to be contemplating legal action.

The FCA took flak for authorising Lendy despite known concerns about mis-selling by the P2P firm. Collateral, another peer-to-peer lender (never authorised by the FCA) went under in February 2018. There are reportedly now fears that other P2P lenders could be close to collapse.

FCA turns up the heat

Earlier this year, the regulator introduced a range of restrictions on peer-to-peer lending (see our blog FCA confirms new rules for P2P platforms).  Now this latest letter from the FCA appears to further raise the stakes. Specifically, it highlights P2P firms’ failure to disclose sufficient information around the nature of their investments and their past performance, leaving investors significantly more exposed to risk than they may appreciate.

Alluring rates of return quoted by some P2P platforms, the regulator suggests, sometimes fail to spell out charges that could leave investors with a rather less compelling net return. More broadly, the FCA’s letter alludes to ‘a range of weaknesses’ in P2P lenders’ operations, and flags particular concerns over some peer-to-peer platforms failing to notify the regulator of ‘significant changes to their business models.’

Under pressure

With some in the P2P sector already facing sizeable challenges interpreting and implementing the detailed rules set out in the FCA’s Policy Statement PS19/14, this latest intervention increases the pressure on a sector still at a relatively early stage in its development. Whilst the FCA continues to talk in terms of protecting investors without stifling innovation, its current emphasis seems to be squarely on the first aspect of that mission.

How can we help you?

Our specialist team can help you verify that the way you do business complies with the FCA’s latest stipulations. We can help you review your practices and procedures to identify and rectify any areas that could cause regulatory friction. Having worked for some time with a number of UK P2P lenders, we have the experience and expertise to support you across the full spectrum of your regulatory and compliance requirements.

To find out more, please get in touch. You can email us on or call us on 0207 436 0630.