Peer2Peer Finance News February 2020 by Alternative Credit Investor

>> 7

COLLATERAL DAMAGE

The administration process two years on

The diversity of the IFISA market Special report supported by

>> 14

LONG-TERM VIEW

Funding Circle’s Lisa Jacobs talks to P2PFN

>> 20

ISSUE 41 | FEBRUARY 2020

IFISA inflows set to surge despite new regulatory restrictions INNOVATIVE Finance ISA (IFISA) inflows are expected to accelerate as this ISA season approaches, despite the new marketing restrictions imposed by the City regulator. An informal straw poll conducted by Peer2Peer Finance News found that peer-to-peer lending platforms are unanimously optimistic about the upcoming ISA season, with inflows already starting to pick up. “We have had over £6m invested in our IFISA so far,” said Frazer Fearnhead, chief executive of The House Crowd. “With the ISA season coming up we are focused on attracting ISA investment into our new auto-invest products and have a target of attracting an additional £6m before 5 April.”

Fearnhead expects approximately 40 per cent of this new IFISA money to come from new users, with the remaining 60 per cent coming from transfers. Assetz Capital announced on 23 January that its IFISA has attracted more than £100m, making up 23 per cent of all invested funds on the platform. “We do expect to see a rise in IFISA inflows this year,” said chief

executive Stuart Law. “Our IFISA inflows have rallied strongly. There is no impact expected from the regulations in our company’s case.” Last year, RateSetter’s IFISA attracted £175m, making it the most popular IFISA provider in the UK. A RateSetter spokesperson said that the platform will be “putting our best foot forward in ISA season” and is looking forward to marketing to

new customers in line with the new Financial Conduct Authority regulations. Under the new rules, platforms cannot suggest that IFISA investments are in any way similar to cash savings accounts and new customers must pass an appropriateness test before investing. However, some industry insiders have pointed out that these restrictions will have little bearing on their ability to attract new investors, as ISA users have been frustrated by stock market volatility and the low interest rates offered by cash ISA accounts. “Cash ISA accounts are so poor, banks don’t make as much of an effort to sell them now,” Bruce Davis, co-founder of Abundance, said. “ISAs aren’t pushed in the same way they used to be.”

Ombudsman threw out most P2P complaints last year THE FINANCIAL Ombudsman rejected the majority of peerto-peer lending cases that were referred to the body last year. P2P lending makes

up a small proportion of complaints to the Ombudsman and Peer2Peer Finance News analysis shows that out of nine cases that ended up being referred by

complainants, seven were rejected. This is separate to complaints dealt with by platforms internally and not referred to the Ombudsman.

The main theme of the Ombudsman complaints was borrower suitability, with more issues raised by those who have taken loans rather than investors. >> 5 In one case, a

EDITOR’S LETTER

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WeWork, 2 Eastbourne Terrace, Paddington, London, W2 6LG info@royalcrescentpublishing.co.uk EDITORIAL Suzie Neuwirth Editor-in-Chief suzie@p2pfinancenews.co.uk +44 (0) 7966 180299 Kathryn Gaw Contributing Editor kathryn@p2pfinancenews.co.uk Marc Shoffman Senior Reporter marc@p2pfinancenews.co.uk Andrew Saunders Features Writer Emily Perryman Features Writer Hannah Smith Features Writer PRODUCTION Tim Parker Art Director COMMERCIAL Alamgir Ahmed Director of Sales and Marketing alamgir@p2pfinancenews.co.uk Tehmeena Khan Sales and Marketing Manager tehmeena@p2pfinancenews.co.uk SUBSCRIPTIONS AND DISTRIBUTION info@p2pfinancenews.co.uk Find our website at www.p2pfinancenews.co.uk Printed by 4-Print Limited ©No part of this publication may be reproduced without written permission from the publishers. Peer2Peer Finance News has been prepared solely for informational purposes, and is not a solicitation of an offer to buy or sell any peer-to-peer finance product, or any other security, product, service or investment. This publication does not purport to contain all relevant information which you may need to take into account before making a decision on any finance or investment matter. The opinions expressed in this publication do not constitute investment advice and independent advice should be sought where appropriate. Neither the information in this publication, nor any opinion contained in this publication constitutes a solicitation or offer to provide any investment advice or service.

hould peer-to-peer lending continue to be called peer-to-peer lending? That is the question that has been circulating the industry for a number of reasons. A spate of bad press in the business pages of the broadsheets (mainly relating to collapsed platforms Lendy and FundingSecure etc) has led some industry insiders to tell Peer2Peer Finance News that the term is “irrevocably tarnished”. Meanwhile, a number of P2P platforms have now exited the retail investor market, leading them to step away from the term as they say they are not technically P2P. And the now-defunct Peer-to-Peer Finance Association has been replaced with the 36H Group (a term which is hardly catchy). While the future of the industry itself is not in doubt, its description is up for debate. Other industry onlookers have told P2PFN that they think the term ‘P2P lending’ will stick – particularly as it is used by the regulator – and that panicky mutterings of an industry rebrand will soon die down. Furthermore, P2P is all over the internet, so it would be a big job – and lots of SEO work – to make a proper transition. Others have suggested that there isn’t really a suitable alternative. Marketplace lending is used in the US, but the chaotic performance of US counterparts such as LendingClub means it may not be better, just different. Personally I think that any knee-jerk moves from platforms are a little hasty, but whatever the industry ends up calling itself, I’m still backing P2P.

SUZIE NEUWIRTH EDITOR-IN-CHIEF

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NEWS

cont. from bottom of page 1 RateSetter borrower complained that the terms of a loan were unclear after he paid more than £13,000 for valuation of a property development but then found the finance was unstainable as it would be divided into tranches. RateSetter had said it provided no guarantees that the funding arrangement would be entered into but the complaint was upheld and it had to cover the costs and pay compensation to the borrower. The platform was also ordered to write-off the outstanding balance of another £10,000 loan and pay compensation to a borrower after his family complained he was a vulnerable customer suffering from bipolar disorder, depression and generalised anxiety disorder. RateSetter had said the borrower passed its credit checks but

initially said it would suspend the loan. Zopa had a complaint from a borrower that they shouldn’t have been approved for a £10,000 loan due to a gambling problem, but the Ombudsman rejected this on the grounds there was insufficient evidence that would have helped the platform identify this. The Ombudsman also cleared Zopa in another case where a borrower was scammed into applying for a £25,000 loan on someone else’s behalf after they gained access to his

account. The Ombudsman said it was a cruel scam but that Zopa shouldn’t have to bear the loss. A Funding Circle borrower complained that a redemption statement did not make it clear that they would be liable for the final monthly payment. The Ombudsman rejected the complaint as the platform had agreed to waive the interest that was payable. In cases involving investors, a Funding Circle customer complained about the platform’s shift to auto-

lending and wanted access under the old terms, but the Ombudsman rejected this grievance. A separate complaint about Funding Circle’s login system was also rejected. A complaint against LendingCrowd was rejected after an investor wanted redress for the platform lending to a sole trader who eventually went bankrupt. The investor argued that the borrower had applied for bankruptcy before the loan was granted but LendingCrowd said there was no public record when it approved the loan and said the accounts showed sufficient cashflow. The Ombudsman also rejected a complaint against Lendy prior to its collapse, from an investor who said it was unclear how long a 180-day interest bonus scheme would last.

Funding Circle’s Lisa Jacobs highlights commitment to retail investors FUNDING Circle’s new UK managing director Lisa Jacobs has underlined the peer-to-peer lender’s continued commitment to retail investors and heralded the introduction of stricter regulatory standards. In an exclusive interview with Peer2Peer Finance News,

Jacobs highlighted the importance of a diversity of funding sources in order to create a sustainable, long-term business. “On a loan-byloan basis, we are not prioritising institutional over retail,” she said. “The loans our retail investors get are the same loans that

institutional investors get. That’s a real positive for our retail investors – they are investing on the same terms as the institutions are, and getting the same product and the same returns. That’s quite rare.” The role of the retail investor in the P2P industry has come under the spotlight recently, due

to the introduction of new marketing restrictions. “There is now a higher bar from the regulator in terms of what they are expecting you to do…And if you’re a retail investor, you should be happy that the bar is being set at a higher level,” she added. Read the full interview on page 14.

LPGP Connect specialise in hosting interactive and engaging investor LPGP specialise in equity hosting interactive andcredit engaging investor forumsConnect in the global private and the private commuty. We forums in the global private equity and the private credit commuty. We work with firms of all sizes and specialisations to uncover the latest work with firms of all sizes to uncover the and latest trends in the industry. Our and goalspecialisations is to bring together investors trends in the industry. Our goal is to bring together investors and managers to provide unrivalled networking experiences. We host sector managers to generalist provide unrivalled networking experiences. We host sector specific and events which aim to inform our clients with the specific and generalist events which aim to inform our clients with the latest news and trends through peer-led networking conferences. latest news and trends through peer-led networking conferences.

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NEWS

Collateral damage: The administration two years on COLLATERAL investors are still in the dark about the recovery of their funds, two years after the peerto-peer lender entered administration. The P2P pawnbroker and property lender collapsed in February 2018, but the administration process has been riddled with delays thanks to a dispute over the choice of insolvency practitioner, discrepancies in asset valuations and the lack of wind-down procedures. An update in December 2019 from administrator BDO revealed it is still reconciling investor exposure to loans due to the state of Collateral’s IT systems, which should be complete early this year. It has taken enforcement action to recover funds on 14 properties and is looking to sell them. November 2014

Manchester-based Collateral launches, initially offering P2P pawnbroking loans secured on assets such as jewellery.

February 2018

Collateral website mysteriously shuts down and it later emerges it did not have the correct regulatory permissions to operate as a consumer credit business. Refresh Recovery is appointed administrator on 28 February.

BDO said it was still waiting for a response from Collateral’s former directors over discrepancies in the client money account and with the valuations of the pawnbroking assets before they can be sold. “The liquidators will make a first distribution to investors once recoveries from the loanbook have reached a level sufficient to make a distribution process economic,” BDO said. “At present, we are unable to set a date for such a distribution, as it will depend to a significant extent on the timing of recoveries from the sale of properties.” It means investors are still awaiting repayment two years since Collateral entered administration. In contrast, Lendy collapsed in May 2019 April 2018

The administration hits a stumbling block after the Financial Conduct Authority launches legal proceedings to replace Refresh Recovery with its own preferred administrator BDO.

June 2018

BDO warns investors may end up having to recoup any unpaid interest owed as creditors and reveals there may not be enough funds to repay investors in full.

but by the end of last year the administrator RSM set out how it would start repaying some funds to investors. P2P industry consultant Theresa Burton said Lendy investors have benefited from the platform having a wind-down plan. “Collateral was never authorised by the Financial Conduct Authority so did not go through the process to demonstrate they had policies and procedures in place for a wind-down,” she said. “Collateral thought it had interim permission. “Even if they had interim permission, that permission was only a registration procedure, there was no authorisation process with it.” Insolvency practitioners caution that no two cases are the same. November 2018

A long-awaited six-month update showed BDO is still unable to estimate the likely returns for investors and creditors.

March 2019

BDO gains permission from investors to take enforcement action against borrowers who are unable or unwilling to repay their loans.

“Each insolvency appointment is unique, having its own circumstances which led to the appointment and individual objectives and strategies going forward,” Geoff Bouchier, managing director in Duff & Phelps’ restructuring advisory practice, said. “Securing and reviewing company records and electronic data are of primary importance at the outset of any insolvency appointment.” He said property loanbooks take time to realise as they have to reach maturity and in the event of default, enforcement steps are then required to be taken. “The key throughout is for the insolvency practitioner to maintain a regular dialogue with the platform’s lenders,” he added. May 2019

Collateral moves into liquidation but investigations continue.

December 2019

Collateral reveals it should have investor accounts reconciled by early 2020 but there is no end in sight for completing the sale of assets.

PROMOTED CONTENT

Adapting to investor desires The House Crowd’s founder and chief executive Frazer Fearnhead explains how the platform is shifting its focus in response to investor demand

HE HOUSE CROWD started life in 2012 as the world’s first equity property crowdfunding platform. The fact that our roots were in property rather than fintech has influenced the way we have developed and the products we offer. My core belief, as a ‘property guy’, is that investing should be a longterm strategy. We have always tried to educate our members as to the benefits of income-producing assets, reinvesting, compounding and growing wealth steadily. However, we recognised that most of our investors prefer their money to be tied up for very short periods and to have the flexibility to withdraw it if they wish. As such, we have adapted to deliver what our clients wanted. The last eight years have been a process of constant evolution, as we have regularly analysed investment behaviour and reacted to client feedback. A large part of our success can be attributed to the fact we have been extremely agile and good at pivoting quickly when decisive action was required. For example, we started off helping people to build a diverse, long-term, buy-to-let portfolio on an equity basis. People wanted their money back more quickly so we started to source properties which could be refurbished and sold quickly. Then, in order to give more stable returns and greater liquidity, we started offering loan notes.

We recognised after a few years that the administrative burden of crowdfunding and managing buyto-let crowdfunded investments was just too heavy to scale the business. The debt-based investments we had started to offer provided higher annual returns. Based on these facts and the minimal opportunity to make large capital gains in the current market, it made sense to move away from equity investments in favour of peer-to-peer propertybacked loans. To date we have offered a broad mix of P2P bridging and development loans on a self-select basis, but we are now strengthening our focus on our auto-invest product. We found that some investors were purely opting for the highest-paying loans – which tend to be higher risk – rather than diversifying their portfolio with lower-risk, lowerreturn loans offered on our platform. Almost all the issues our member support team deals with stem from investors being unable to get their capital back when required or interest not being paid on time. Therefore, it made sense for us

to follow what many platforms have also done and switch to an auto-invest model. From January 2020, our platform has been almost entirely focused on auto-invest as opposed to self-select. We offer three main products: Cautious, Balanced and Bold, with maximum loan-to-values (LTV) and maximum average LTVs for each product. Target rates are from five to seven per cent with occasional incentives or bonuses. These auto-invest accounts provide a good level of diversity to mitigate risk, combined with reasonable liquidity – investors can give 30 days’ notice to get their money back (subject to our standard terms). We are also shifting our focus towards making loans to professional property investors and developers, rather than bridging loans to people who are often in difficult circumstances. We believe this will enable us to provide a less problematic business model and greater client satisfaction. For the time being, we still offer a few self-select development loans, but we have decided that our Innovative Finance ISA and selfinvested personal pension wrappers can only be used with our autoinvest offering. Not only does auto-investing remove the hassle for our customers and provide greater diversity but it could also result in higher returns, by utilising funds for 365 days a year and the benefits of compound interest. Everyone’s a winner.

NEWS

New P2P body will not release member data THE CLOSURE of the Peer-to-Peer Finance Association (P2PFA) has left a void when it comes to industry data but experts say other bodies and extra regulation can fill the gap. The P2PFA was disbanded last month and replaced with the 36H Group, a sub-group that will sit within fintech trade body Innovate Finance. The P2PFA released lending data from its members on a quarterly basis, which helped provide an insight into the state of the industry. The 36H Group said it will focus on policy and regulatory matters, as well as promoting the benefits the sector is delivering but will not provide the same loanbook updates. “The P2PFA did a lot of things that were very positive for customers,” said Neil Faulkner,

founder of P2P analysis and ratings firm 4th Way. “It set good standards and it improved transparency. “However, if transparency and high standards are good for business – which they are – you don't need an association to drive that. “Many platforms outside the P2PFA provided more information and data either publicly or to 4th Way than those inside of the organisation did. Many of them have exceptionally high standards of underwriting.

“In some ways, the standards of an association can be dragged down by the lowest common denominator within the group.” Jonathan Minter, of alternative finance research firm Intelligent Partnership, highlighted that all firms must now provide loanbook data under the new Financial Conduct Authority (FCA) regulations. “While we would encourage the industry to provide potential investors with as much information about them-

selves as possible, it is important to remember that the P2PFA only had a very limited number of members,” he said. “Therefore, while their figures were useful to some extent, they did not provide a full market overview. “Figures from trade bodies are only one source of data. “Thanks to the new FCA regulation, P2P platforms now have quite a lot of disclosure requirements. This includes actual returns compared to target rates, expected and actual default rates as well as information on any provision fund the platform will have. “That said, we certainly think that a mechanism that offers simple comparisons of regularly updated P2P platform data is very important for the future of P2P.”

NEW TRADE BODY CEMENTS P2P’S PLACE IN FINTECH THE NEW 36H Group has the added status of being part of the wider fintech industry’s trade body Innovate Finance, which typically attracts high-profile speakers such as the Bank of England governor and the chancellor to its Global Summit. In the past, peerto-peer lenders had privately expressed to Peer2Peer Finance

News that Innovate Finance did not seem interested in the industry – the launch of a dedicated sub-group will surely go some way to refute that. The 36H Group will focus on policy and regulatory matters, as well as promoting the benefits the sector is delivering; including bringing choice, competition

and transparency to the lending and investment markets. Its founding members are Funding Circle, Zopa, RateSetter, Lending Works and CrowdProperty and membership is open to all P2P lending platforms that operate under 36H regulations. Pertinently, the 36H Group includes all ‘big three’ P2P lenders

among its founding members, whereas the P2PFA did not after RateSetter’s departure in 2017. 36H regulations relate to the inclusion of retail investors in the lender’s business model, which rules out former P2PFA members such as ThinCats and Landbay joining the new organisation.

For even more peer-to-peer finance news, go to our website at www.p2pfinancenews.co.uk. With real-time news and exclusive insights, www.p2pfinancenews.co.uk is your indispensable portal into the world of peer-to-peer lending. Go online to sign up to our e-newsletters, for a comprehensive digest of the latest peer-to-peer finance news sent straight to your inbox. You can choose our weekday e-newsletter, which comes out by 7am Monday to Friday, or sign up for our once-a-week version that is sent out at noon on Wednesdays. www.linkedin.com/company/peer2peerfinancenews/ @p2pfinancenews

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NEWS

Advisers “very positive” about P2P ahead of RateSetter portal launch RATESETTER has revealed that feedback from advisers about peer-to-peer investing has been positive, following six months of meetings to drum up interest in its new adviser portal. The P2P lender’s director of wealth investments Alexa McAlister said that they have had “some very positive first conversations” and RateSetter is currently lining up advis-

ers to join its dedicated offering which launches this month. “We’ve been talking to advisers for the past six months or so and we’ve had some very good conversations,” McAlister said. “Some of them already knew about P2P and knew of RateSetter. Some advisers didn’t know about us and some were a bit sceptical, but we’ve found that once they learn

about our product they tend to be very positive.” McAlister said that the advisers were particularly interested in the liquidity that RateSetter has to offer. “We’ve been very encouraged by the response,” she said. McAlister added that the adviser portal has been “very much part of our game plan” for a while and does not represent a pivot away from the

platform’s core base of retail investors. “Obviously we’re launching in the advised space after the regulations came in in December, but this has been very much part of our game plan prior to that,” she said. “We have an excellent product that the investor can access directly but we also know there are many investors who would like to do it through advisers.”

P2P property lenders optimistic after election result PROPERTY-BACKED peer-to-peer lenders are looking forward to a buoyant 2020, after the Conservative Party’s General Election victory brought an end to the uncertainty that characterised 2019. A number of property lenders have told Peer2Peer Finance News that they expect to see new interest in the commercial property, residential property and property development sectors, thanks to a stabilising economy and a raft of property-friendly policies. “With the decisive outcome of the General Election offering greater clarity and certainty on the UK’s political future, property both residential and commercial has seen a resurgence in interest,” said Brian

Bartaby, founder and chief executive of Proplend. Bartaby pointed to HMRC data which shows that the number of nonresidential UK property transactions in December was 13.4 per cent higher than November – a sign that consumer confidence is growing after a long period of hesitancy. “Talk of an imminent interest rate cut by the Bank of England will only add further interest in the commercial property sector as investors seek attractive rates of risk-adjusted yield,”

Bartaby added. “The retail property sector especially is looking for Boris Johnson (pictured) to follow through on his pre-election promise to tackle business rates – possibly up to 50 per cent discounts – in order to regenerate high streets.” Meanwhile, Andrew Turnbull, managing director at Wellesley, said that the platform’s developers have already reported an increase in reservations of new build flats and houses.

“Following a prolonged period of political uncertainty, where buyers of flats and homes particularly in the South East and London have been sitting on their hands owing to the concern of a Corbyn victory, we are now seeing a material increase in interest following the Conservative landslide,” Turnbull said. “This will likely lead to a period of stability and confidence in our opinion.” In the weeks following the election, CrowdProperty’s chief executive Mike Bristow told Peer2Peer Finance News that he predicted an increase in housebuilding this year. “Now that we are in a less uncertain year, developers will be more confident about delivering on that,” he added.

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JOINT VENTURE

The secret of successful risk mitigation Frazer Fearnhead, founder and chief executive of property developmentfocused peer-to-peer platform The House Crowd, reveals his highly effective approach to risk management

ISK MITIGATION RUNS through the heart of the peer-to-peer lending community. It is the ‘secret sauce’ that gives some platforms an edge, while others simply take their cue from the regulators. But there is no deep secret to risk mitigation – at least according to The House Crowd’s founder and chief executive Frazer Fearnhead. For him, it’s all about hard work and an attention to detail from the earliest stage of the lending process. “We start with Royal Institute of Chartered Surveyors (RICS) valuations,” he says. “Although, we have learned these can’t always be relied upon so we will always review them and – if appropriate – we will instruct an audit of the valuation by a third party. “We use market-leading software to analyse a development loan proposal, plus we use a highly experienced new-build sales consultancy who will visit local agents and produce a feasibility study and sales appraisal. “We have also come to realise that the borrower themselves is a crucial factor. Even if the security appears to be solid, we now conduct extra checks on the borrowers. If they are a developer, they must of course have a solid track record for the type and size of development they are proposing.” The House Crowd’s risk mitigation approach is an ongoing process, which can evolve to meet

the challenges of an ever-changing industry, and this means that the platform has often found itself going the extra mile to ensure that its investors’ money is safe. As a result of this approach, when the new Financial Conduct Authority (FCA) regulations were announced last year, The House Crowd found that it had very little to do in order to meet the new regulatory requirements. “We have improved our credit policy and processes a little as a result of the FCA rules, but we had already started the improvement processes many months before the new regulations were announced,” he says. “We have hired several senior staff members and employed a consultancy firm to work with us to improve all areas of our loan department.” Over the past six months, the platform has been focused on loan recoveries – specifically, reducing the time taken for the recovery of loans, and devising clearer strategies for the recovery of late loans. New

enforcement clauses have been added to loan documents to enhance the protection available for The House Crowd and its investors. The lending team also looks at the platform’s loan criteria and underwriting processes on a regular basis, with a view towards tightening up risk procedures where necessary. “From 2020 onwards we will be focused very much on lending to professional property investors and property developers,” he says. “They will need to show a good track record, a well-researched market report and feasibility study and an attractive proposal with a detailed construction budget supported by suitable evidence, and a good sales and marketing strategy.” By prioritising pro-active risk management, The House Crowd has been able to ensure that 100 per cent of capital has been repaid on all of its loans to date – a ringing endorsement of the platform’s commitment to mitigating risk through sheer hard work.

PROFILE

Bring it on

Funding Circle’s UK managing director Lisa Jacobs talks to Andrew Saunders about her new role, regulation and why she’s more confident than ever about the future of the business

ID 2019 MARK THE end of the honeymoon period for peer-to-peer lending? A flurry of platform failures, the arrival of a new, more proscriptive regulatory environment and doom-laden headlines warning of impending economic slowdown certainly conspired to put the sector under pressure like never before. Not an easy time to step up to one of the top jobs at Funding Circle, which naturally attracts more than its fair share of scrutiny – how will the UK’s biggest and highest-profile P2P player – and the only listed one, to boot – perform as the economic cycle begins to turn? But for Lisa Jacobs, who took over from co-founder James Meekings as UK managing director in September, such challenges are all grist to the mill. If the honeymoon is over, it’s being replaced by a welcome opportunity to prove to naysayers that P2P lending is not just a fairweather success story but here for the long haul. “We feel very confident, it’s a really exciting time for the UK business,” she asserts. “I’m like, ‘Bring it on’. We’ve focussed on how we ensure that our book and our credit models are as resilient as they can be. We’ve stress-tested the book – ‘What happens in these different scenarios?’ And even if losses

doubled, our investors would still make money.” The platform also keeps a close eye on risk, but apart from tightening up criteria on some higher-risk loans last year, it’s largely been a case of watching and waiting. “We keep monitoring and we will take action when we need

to,” Jacobs says. “But we’ve not seen any further deterioration.” With £3.7bn of small business loans under management, 80,000 investors globally and nearly a decade of experience and credit data under its belt, you might expect that Funding Circle would be in a better position to cope with

PROFILE

adversity than some of the smaller P2P platforms. How does she think the industry as a whole will stand up not only to tougher economic conditions but also to the raft of new regulations introduced by the Financial Conduct Authority (FCA) in December? “We’ve always been big supporters of regulation,” Jacobs comments. “I think the new regulations are really positive and set a good bar across the industry. We’ve seen some businesses leaving – some on good terms, some on less good terms – but this year I think we’ll see a strengthening of the industry, a bit of a reset.” While there has been controversy over some of the new rules – particularly the investor marketing restrictions – Jacobs believes that the FCA has managed the transition to the new regime as well as it could

have done. “I think they have been very consistent in what they set out to do,” she says. “In 2014 they said, ‘We’re going to do this now,

resilient and “grown up” market for lenders and borrowers alike. “I think we will see a bit more of that, but it’s a natural progression

“ What’s important to us is the diversity of different funding sources”

then come back in a couple of years and review the market.’ We were all quite innovative business models. They are learning too, about how to regulate an evolving industry.” That’s not to say that 2020 will be business as usual, however. “I think there’s an inevitability about a new industry that as it matures, you will start to see a shake out.” So there may be more platform failures like Lendy and FundingSecure to come, but the end result, she believes, will be a more

– I don’t think people should get panicked by it,” she comments. One of the other big questions hanging over the sector at present are the prospects for retail investors: as more and more platforms become increasingly reliant on institutional funding, will the smaller investors who helped build the industry get left behind? It’s a longstanding concern that has been given new impetus by falling returns across the board and recent announcements from

PROFILE

Landbay and ThinCats that they are exiting the retail market entirely. But Jacobs reckons this is more a question of an individual platform’s strategic response to tighter regulations around retail funding, than the beginnings of a wider retail wind-down. “If you have a very small portion of your platform which is retail, and there is now a higher bar from the regulator in terms of what they are expecting you to do – that’s my sense of what is really driving it,” she explains. “And if you’re a retail investor, you should be happy that the bar is being set at a higher level.” She also points out that such managed exits mean that investors will not lose any money as a result. “ThinCats and Landbay have managed their books in the right way, so that there is no consumer harm,” she adds. “I would hope that can set the standard for any further changes across the industry.” As for Funding Circle, it’s not a question of choosing either retail or institutional funding, but rather of striking the right balance between the two. “What’s important to us is the diversity of different funding sources,” Jacobs says. “We want to have a very sustainable long-term platform and in order to do that, we need diversity of funding that

real positive for our retail investors – they are investing on the same terms as the institutions are, and getting the same product and the same returns. That’s quite rare.” All the same, Funding Circle has faced criticism from retail investors,

“ It’s a really exciting time for the UK business”

delivers great returns across all the different funding sources. “On a loan-by-loan basis, we are not prioritising institutional over retail. The loans our retail investors get are the same loans that institutional investors get. That’s a

particularly over the way it handles loans on its secondary market. Average resale times on that market rose from 100 days in September to 124 days in October, prompting the introduction in December of a new tool to boost liquidity. “Historically

our secondary market has been very liquid, but what we found [last year] was that investors were waiting longer to access funds,” Jacobs says. “So what we did was to think about how we can start to give investors funds, more quickly.” Having previously operated a taxi rank system where sellers had to wait until they reached the top of the queue, investors can now start selling off portions of their loans much more quickly. The available liquidity is automatically shared out around everyone wanting to sell, rather than limited to those at the front of the line. That way, at least some money lands in sellers’ accounts on a regular basis. Even if completing

PROFILE

“ The share price moves due to things that aren’t in our control”

the disposal of whole loans still takes a while, investors can see that progress is being made. The new scheme has not been without its critics however – established investors who had been patiently waiting their turn to sell understandably feel that they are losing out to newer punters now allowed to ‘jump the queue’. It’s a case of trying to give the greatest benefit to the greatest number, she says. “We did think hard about what would provide the best outcome for all of our investors as a whole. Whatever solution we came up with, there were going to be a small number of investors who felt hard done by.” Since its hotly-anticipated initial

public offering (IPO) back in 2018, Funding Circle has also had to get used to the vicissitudes of life as a listed company. Its shares – which floated at 440p – dipped to an alltime low of 78p in January. A hefty drop, even allowing for the fact that private investors and public markets often don’t see eye-to-eye on company valuations. But fretting about the latest price is not really the point, according to Jacobs, who in her previous role as chief strategy officer was part of the IPO team. “We don’t look at it on a daily basis,” she states. “The share price moves due to things that aren’t in our control. Our focus is on how we build a really great long-term business, that supports thousands of small businesses and provides a great return for our investors.” If they get that right, she adds, then the market will eventually recognise the value. Besides, having helped Funding Circle grow into the international business it is today, there is no doubt in her mind that the IPO was the right thing to do. “What it allowed us to do was to build up a really strong balance sheet – if you look across the balance sheet of UK platforms we are the best capitalised,” she says. “It’s enabled us to innovate and launch new products by ceding some of that balance sheet to grow those products. I am very happy that it was the right thing to do.” That balance sheet cushion also relieves Funding Circle of the need to keep raising equity funding – something that may become more difficult as the economic

cycle turns – and frees up management time to think more strategically. Over the coming year, her priorities are to continue to use technology to automate more processes and improve the customer experience, and to serve more customers, both directly and through a developing programme of referrals and partnerships. “We started a pilot this year referring businesses to other lenders, which is something quite different from what we have done previously,” Jacobs comments. “But we have a really good brand here – our net promoter scores are over 80. If a business wants to access finance, but for whatever reason we can’t support that, then being able to offer them an alternative solution is really useful.” It’s the kind of market power that comes with scale, something that Funding Circle has a lot more of now than it did when Jacobs joined the then-40-strong start-up back in 2012. She even remembers having to “steal” a desk on her first day because there was nowhere for her to sit. There are now around 1,000 employees across the whole business, and she has her very own desk opposite that of co-founder and chief executive Samir Desai. “We’ve come a long way and really built up the talent we have got, and the governance,” Jacobs says. “What has stayed the same though is the culture of the business – even early on were always conscious of how to keep that fast growth, fast moving culture as we mature. The personality of the business has remained remarkably similar. It’s what sets us apart.”

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JOINT VENTURE

Property politics

With the General Election firmly behind us, Andrew Turnbull, managing director of Wellesley Finance, shares his thoughts on how the new government can support the struggling housing market

OUSING AVAILABILITY and affordability were hot topics in the run up to the recent General Election, with all parties promising to tackle the housing crisis head on. But Wellesley has been anticipating housing sector reform for several years now, even adjusting its own business model to meet future demand. Where once the property lender focused its portfolio in London and the South East, now it is primarily interested in the East and West Midlands, and cities such as Manchester, Birmingham, Leeds and Nottingham. This was a calculated shift designed to take advantage of areas where property prices were set to rise beyond the national average – and this foresight has paid off. “In the run up to the General Election, housing availability and affordability were very hot topics – and understandably so,” says Andrew Turnbull, managing director of Wellesley Finance. “Wellesley has been fortunate enough to have spotted it at an early stage so it's certainly something that was not a surprise to us.” The new government has already pledged to increase the availability of housing, and to improve the planning processes for new developments, in an effort to help first-time buyers get a foot on the property ladder. However, Wellesley has already turned its

attentions to another group of underserved homeowners. “It’s not just firsttime buyers who are struggling to find suitable properties – it’s those people who were first-time buyers five or six years ago who thought their property would rise in value, but have not actually seen much appreciation on the value on the homes,” explains Turnbull. “They are now looking to buy a bigger family home, but at an affordable price. “In this business we've got to think five, 10 years ahead, not just two years ahead.” Last year was one of the slowest years for housing growth overall, with Nationwide recording a 1.4 per cent increase in the average property price across 2019. But Turnbull notes that this headline figure doesn’t tell the whole story. Someone who bought a property in the South East five years ago will find that their home has not really grown in value, whereas a homeowner in the West Midlands could have seen the value of their property rise by more than 10 per cent. “If you were to dig down and look at each region and city, you would see a huge differential in housing price growth,” he says. “You would also see a big difference between houses valued at say £800,000 and

over, versus those that are more affordable. And that's very telling.” To encourage more activity in this segment of the market, Turnbull suggests that the government could consider allowing firsttime property sellers to roll their Help-to-Buy allowance into another property. “I'm sure the intention is not to create a cliff edge,” says Turnbull. “However, it really does just highlight how long Help-to-Buy is probably going to have to be kept in place for the foreseeable future. This is something that we bear in mind when we are looking at whether we finance developers building onebedroom flats or four-bedroom houses. Whilst we don’t have a particular dependency on Help-toBuy, we do have to consider how that spectrum of first-time buyers is able to move through the property ladder to find their next home.” This focus on the future means that Wellesley will always be refining its offering and searching for new opportunities in the housing market. But Turnbull is modest about the platform’s success, and track record of identifying trends. “What we do ultimately is manage risk,” Turnbull says. “And we do this by continuously improving your policies. It’s a process of constant refinement.”

IFISA

Smorgasbord of choices

There are a diverse range of investments eligible to be held in the Innovative Finance ISA wrapper. Emily Perryman unpicks the market for investors

HE INNOVATIVE Finance ISA (IFISA) market has come on in leaps and bounds since its creation in 2016, giving investors even more choice over how they invest in peer-to-peer lending. With more than 40 versions of the P2P tax-free wrapper currently in existence, there is no one-sizefits-all IFISA for investors. From different types of loans and riskreturn levels through to a choice of manual or automated lending,

the abundance of product options means investors need to think carefully about which IFISA is right for them. “Although the IFISA may be seen as being the same product, each IFISA is wholly unique,” says Filip Karadaghi, managing director of LandlordInvest. “The IFISA is basically a microcosm of the wider investment universe, incorporating features of the major asset classes including equity, debt and real estate.”

Choices, choices The level of choice in the IFISA market can be bewildering at first. Providers such as Zopa and Lending Works offer consumer loans, whereas platforms like ArchOver, Funding Circle and Growth Street focus on business loans. Relendex and Proplend are among the providers offering property loans, and there are also platforms that target niche sectors like litigation funding and green energy. Advertised returns range from

IFISA

around four per cent a year at Zopa right up to the low- to mid-teens at the likes of CapitalRise. Minimum investment limits vary from £1 at Assetz Capital, to £10 at Loanpad, to the full annual ISA allowance of £20,000 at Folk2Folk, the local and rural business lender. Some providers require investors to manually pick individual loans themselves while others offer automated lending, whereby investors’ money is automatically invested across a range of different loans. “Anyone considering investing in an IFISA should always do their due diligence and make sure they understand what they are actually investing in,” says Charlie Taylor, head of Octopus Choice. “There is huge variety among P2P providers, both in the type of underlying assets they lend against and the level of returns that are targeted.” Getting started When comparing the different IFISAs on offer, investors need to keep in mind their individual circumstances – this includes their risk profile, financial goals, level of wealth and investment experience. “To start with they should be clear about what it is they’re looking for in terms of target return, balanced against their appetite for potential losses,” says Taylor. “It’s also good

to consider how involved you want to be in selecting your loans and managing your portfolio, or whether you’d prefer for that to be done for you by the platform. Once you’ve considered all those factors, it becomes much easier to take a look at the market and understand what matches your needs most closely.” Typically, the IFISAs offering the

“ There is huge

variety among P2P providers

”

highest returns have the highest level of risk and are likely suited to wealthy, experienced investors. LandlordInvest, for instance, which offers returns of up to 12 per cent on residential buy-tolet and bridging loans, targets high-net-worth individuals and sophisticated investors. “We also have restricted investors, but they form a small part of the total investor base, around 10 per cent,” says Karadaghi. “Indeed, I believe that our IFISA product is better suited for investors that have substantial investing experience, understand the risks and the underlying asset class, and are able to exercise

prudent diversification themselves.” Karadaghi suggests investors who have little to no experience start on a limited scale with the ‘big-three’ P2P platforms – Zopa, RateSetter and Funding Circle – to learn how P2P investing works prior to considering more specialised platforms. “These require considerably more experience and knowledge of investing, although potentially offering better risk-return characteristics,” he explains. Zopa says its two IFISA product options, which offer returns of between 3.4 and six per cent, are targeted at investors who want to make a reasonable return on their investments over a medium term of five years. “Our IFISA offers a viable alternative to stocks and shares, and is aimed at investors that want to diversify their portfolio and are happy to take capital risk,” says Zopa’s P2P chief executive Natasha Wear. Investors shouldn’t automatically assume that IFISAs with low rates are lower risk. Sarah Coles, personal finance analyst at Hargreaves Lansdown, points out that investors could be giving up returns for something else – like easy access to their money – or the product might simply be less competitive. Coles says it’s important to get to

IFISA

grips with the risks posed by the borrowers themselves. “If you’re investing in a single company, repayment depends on the success of the business model. This can be difficult for investors to accurately assess unless they’re an expert in the area,” she warns. Liquidity is another factor to think about as it varies significantly across the industry. Funding Circle and Zopa let investors access their funds early by selling loans on the secondary market; others automatically reallocate your loan to another lender. Relendex, on the other hand, says its commercial property lending IFISA is aimed at investors who are looking for a consistent income stream but are less concerned about illiquidity. Loan repayments can be delayed, which means the product should be viewed as a longer-term investment. It’s also worth researching the IFISA provider itself – checking it is authorised and regulated by the Financial Conduct Authority (FCA) and looking at data on returns, fees and bad debt.

“ Diversification is key to managing risk” “We would suggest that people choose a well-established platform with a good track record of performance,” says Wear. “The FCA now requires all P2P providers to publish outcome statements on their websites, so investors should look at this information to assess the return performance for each provider they are considering.” Spreading risk To reduce the risk of losses, experts say investors should spread their money across different types of P2P lending as well as other savings and investments. “Diversification is key to managing risk across an investment portfolio, so an IFISA could fit alongside cash savings and stocks and shares investments, for example,” says Stuart Lunn, founder and chief executive of LendingCrowd. “This would give

lenders access to an asset class that isn’t linked to the up and downs of global stock markets yet still provides the potential for inflationbeating returns.” Under marketing restrictions introduced in December 2019, individual investors who don’t qualify as sophisticated or highnet-worth can only put 10 per cent of their overall portfolio into P2P, which in itself ensures a level of diversification. It also means that platforms requiring high minimum investments are likely to be out of bounds for all but the wealthiest and most experienced of investors. “One investor might be totally fine with lending just £10,000 in one loan in just one IFISA because that investor is investing half a million pounds in a variety of

IFISA

other types of investments – and the investor is only interested in the overall result of the entire investment portfolio,” says Neil Faulkner, managing director of comparison site 4th Way. “Most investors will need to look to invest through IFISA platforms with minimum lending amounts of

£1 to £100, or which automatically spread risk across a lot of loans.” Since investors are only allowed to subscribe to one IFISA in any single tax year, the easiest way for new investors to achieve diversification in P2P lending is to opt for a platform offering automated lending. “If you’re lending to small

businesses or individuals, you usually want to be able to spread your money across at least 180 borrowers to begin with to contain the risks well enough,” says Faulkner. “If you’re doing property lending, typically a few dozen loans is sufficient. When lending against other assets, the number of loans you need can range from a few dozen to over 100.” Self-select IFISAs are generally suited to high-net-worth or sophisticated investors who are able to perform deeper due diligence on the platform and each loan, as well as manage their own portfolio diversification. Uma Rajah, chief executive of property lender CapitalRise, which offers a self-select model, says investors need to understand the individual risks and nuances of the loans on its platform. “The key thing to look at in property lending is the loan-to-value (LTV) ratio,” she says. “Our average LTV is 63 per cent so there is quite a big headroom for investors.” Ultimately, investors who are keen to invest in an IFISA should choose one that they understand, which matches their appetite for risk, offers the right level of access to their money and suits their overall financial goals.

REGULATION

A brave new world The new regulations have already sparked change in the P2P sector, but is this just the beginning of a brave new world of platform oversight? Kathryn Gaw reports

N THE WORLD OF financial regulation, caution is king. And this is particularly true at the Financial Conduct Authority (FCA). In an effort to keep pace with the rapidly growing peer-to-peer lending market, the FCA has spent the past year at the frontlines of the industry: drafting – and then implementing – new rules for crowdfunding, crowd bonds and P2P loans, making surprise visits to offices, consulting with platform bosses and doing everything in its power to identify bad actors while protecting retail investors. It has been a somewhat controversial intervention and the regulator has been accused of being too heavy handed in its approach – particularly when it comes to investor restrictions. Some platforms have criticised the 10 per cent rule, which bans retail investors from placing more than 10 per cent of their total investment portfolio in P2P loans. This criticism reflects widespread concern that the P2P industry could be forced to rely on institutional investment, as retail investors

find it more difficult to access P2P platforms and build strong portfolios. But as the dust settles on the new regulations, more and more industry insiders are coming around to the FCA’s vision for the sector. “Retail investors are not being pushed out, they’re being restricted,” says Frank Wessely, partner at insolvency specialist Quantuma. “They will have less choice than before but if I were a retail investor, I would be more comfortable investing in P2P because of these regulations.” Ian Anderson, chief operating officer at ArchOver, was not a fan of the 10 per cent rule at first, but two months after the rule was introduced, he supports the concept. However, he warns that “we don’t believe it will stop the small investors being attracted to

“ More rules and

updates are highly likely by the end of 2020

”

high interest rates and not taking the time to properly educate themselves about the risks.” Although the regulations apply equally to every player in the P2P industry, there is still a lot of variety in how the rules are actually implemented. This is most obvious when it comes to the appropriateness tests. While some platforms ask the

REGULATION

user to self-identify as either a restricted, sophisticated or professional investor, others are much more thorough – asking each prospective new member to answer a detailed series of questions before they can even open an account. Peer2Peer Finance News has completed a number of these tests and it’s true that the length

and detail of the questionnaires vary from platform to platform. It is possible that the nature of these appropriateness tests could deter new investors from considering P2P, but so far this does not seem to be the case. A RateSetter spokesperson would only say that “the appropriateness test is working”, while ArchOver’s Anderson said that the platform

had received “very little” feedback from its users regarding the new regulations. Ablrate’s appropriateness test has been described as “trickier” than most, but in line with other platforms, this does not seem to have negatively impacted on lenders’ appetite. In fact, the early signs suggest that the appropriateness test – along

REGULATION

with the other new regulations such as the 10 per cent rule, and the requirement for all platforms to have a wind down plan – have actually bolstered confidence in the P2P sector. “We’ve always believed regulation is important for the industry,” says a spokesperson for a large P2P platform. “It raises industry standards and strengthens customer protections.” “The regulations have had a positive impact both internally in the sector and externally in terms of their perception,” adds Wessely. “I think gradually you’ll start to see financial advisers becoming more comfortable and seeing more opportunities in that space. Obviously P2P won’t be suitable for every client but I think you’ll start to see financial advisers start to

“ Retail investors are not being pushed out”

recommend the more corporate and stable end of the sector. “You’ll see a more stable, more managed, more transparent sector falling into place with the rest of the FCA and Prudential Regulation Authority-organised environment.” The adviser market has always taken an arms-length approach to P2P lending, so it will be interesting to see if tighter regulation translates into greater interest from independent financial advisers (IFAs). Late last year, several platforms, including CrowdProperty, RateSetter and Blend Network predicted a spike in IFA interest, and RateSetter is set to launch a

dedicated IFA portal this month. Institutional investors are also set to play a larger role in the P2P sector in the wake of the new FCA rules. ThinCats and Landbay have already exited the retail market to focus entirely on institutional money instead. Increased investment via IFAs and from institutions would certainly shake up the P2P landscape, affecting everything from the way platforms market their products, to the loans they pick and the returns on offer. This expectation of change has left many platforms predicting that the FCA will tighten up its regulations again as early as this year. One platform chief executive told Peer2Peer Finance News that the FCA has already begun calling their office to ask for feedback

REGULATION

on the implementation process, suggesting that the regulator is already thinking about the possibility of either reviewing or amending the new rules. “The nature of regulations is that they will evolve over time,” says David Bradley-Ward, chief executive of Ablrate. “The only issue we have with that is that any new regulations need to be proportionate. If regulation becomes too burdensome or disproportionate innovation in fintech will die quickly in the UK and move elsewhere.” ArchOver’s Anderson predicts that “more rules and updates are highly likely by the end of 2020, especially if any more platforms fail,” while Wessley says it is too early to speculate as “the FCA will want to see how this teething process goes and which particular challenges the platforms are facing.” But rather than tightening or changing the existing rules, the consensus seems to be that the FCA might start to segment the P2P market according to perceived risk, or target investor. For instance, property-backed platforms

could be subject to different rules than business lenders or invoice finance providers. “I can’t see the FCA tightening up any of the rules,” says Jonathan Segal, partner at law firm Fox Williams. “They are already relatively tight, but they may look at how individual platforms respond to the rules and they may make different requirements applicable to

“A good deal of the issues we have seen on P2P platforms could have been solved if there was an efficient secondary market,” he says. “With such a market available, lenders would have the chance to rebalance their portfolios for risk, price discovery in delinquent loans would be more transparent and fairer, and – with the right technology – loans could be traded by a wider

“ There are very different types of risk involved and different target investors”

different types of platforms. “They could be sorted by borrower type, by whether there is security or not, or by whether they are pricing platforms or discretionary platforms. This would make sense given that there are very different types of risk involved and different target investors.” Bradley-Ward believes that the FCA is still missing a “glaring hole in the regulations in regard to secondary markets and liquidity,” which will have to be addressed sooner rather than later.

ecosystem of liquidity providers. Obviously, we are biased as that is exactly what we will be launching shortly, but that does not detract from the fact that it is an obvious area of improvement.” There is clearly still plenty of room for the FCA to increase its oversight and take an even more hands-on approach to the alternative lending sector, but this is unlikely to happen within the next few months. In March, the FCA’s chief executive Andrew Bailey will leave the City watchdog to become Governor of the Bank of England and a new era of leadership will begin at the FCA. Will this lead to more stringent regulations, or a segmentation of the existing market? It is too early to say. But as ISA season approaches, the real-world impact of the new rules will soon become clear and the FCA will paying close attention to the investor experience and associated risks. In the meantime, if tighter regulations lead to greater investor confidence and a wider pool of customers, platforms may find that they are much less resistant to the next round of updates, whenever they may arrive.

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JOINT VENTURE

The domino effect

Jonathan Segal, partner and head of fintech and AltFi at Fox Williams, explains how the recent FCA rules were just the start of a new era of P2P regulation

HE NEW FINANCIAL Conduct Authority (FCA) regulations for peer-to-peer lenders are still just a few months old, but their long-term impact is already becoming apparent. As well as offering additional protection for consumers, the new rules are set to shake up the alternative lending community, changing the way that platforms are funded, founded, and advised. Jonathan Segal, partner and head of fintech and AltFi at law firm Fox Williams, has been advising a number of P2P platforms as they navigate these new rules, and he has spotted a few emerging trends across the industry. “P2P platforms now face additional costs in terms of customer acquisition, which will likely lead to a drop-off in the amount of retail money that is available,” Segal predicts, adding that this could force platforms to take on a mixture of funding, from both retail and institutional investors. The Financial Conduct Authority (FCA) has recently issued a temporary intervention on the marketing of speculative mini-bonds to retail investors – a temporary suspension that is likely to become permanent, says Segal. This has led some platforms to put a halt to their plans to issue bonds to retail customers and consider other routes to market. “We have seen a retraction from the market where platforms are rethinking what they’re trying to achieve,” says Segal. “Sometimes

there may not have been a particularly good reason why they were going down the bond route instead of the P2P route, so in one sense this might put P2P back in favour and some bond providers may move into the P2P space.” One route they may take is to become an Appointed Representative (AR) of a Regulated Principal (RP), who will provide compliancefocused technology solutions while they run the actual business. This puts the onus on existing RPs – such as Rebuildingsociety – to become de facto regulators to their ARs. Rebuildingsociety has seen “significant interest” following the FCA’s suspension of IFISA-wrapped minibonds, but after consulting with Fox Williams, Rebuildingsociety’s compliance director Kylie Greeff has opted to take a “very conservative” approach to taking on new platforms. “We have rejected many applications, including an expression

of interest from a major European platform, wanting to operate in the UK market,” says Greeff. “A common reason for rejecting applications is that applicants want a P2P lending platform to arrange finance into projects in which they have an interest. We make it clear early on that there must be no conflict of interest in the transactions and lending undertaken on the platform.” The complexities of the RP/ AR relationship require a strong adviser, and Fox Williams was one of the first firms to identify this vital gap in the market. Now Segal believes that the new regulations will lead to “a much greater need to get advisers involved to make sure that regulations are complied with.” “Advisers play a critical role in helping principal firms,” agrees Greeff. “Rebuildingsociety is consulting with Fox Williams regarding its AR agreement and its suitability in a world where the AR networks are under scrutiny by the regulator. “We are also working on a package of legal services which ARs can use in conjunction with our templates. There is no one-sizefits all-approach and this is where advisers are key to helping firms meet their objectives.” This is just one of the surprising new innovations that the FCA regulations may have indirectly sparked. As long as platforms seek proper counsel, these innovations could lead to a prosperous new era in P2P.