UK peer-to-peer self-regulatory body P2PFA has disbanded as a new one forms amid FCA regulations

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P2PFA, the UK-based self-regulatory body comprised of some of the country’s largest peer-to-peer (P2P) lending platforms, has been disbanded and replaced by a new subgroup, dubbed the 36H Group, per The Times.

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The shuttering of P2PFA and formation of the 36H Group come amid a new regulatory regime introduced by the UK’s financial watchdog, the Financial Conduct Authority (FCA).

The 36H Group, whose initial members are Funding Circle, Zopa, RateSetter, Lending Works, and CrowdProperty, is a subgroup within fintech trade body Innovate Finance. Membership is open to all P2P lending platforms. The group, named after the FCA regulations that govern the industry, is chaired by Innovate Finance CEO Charlotte Crosswell.

The shuttering of P2PFA and subsequent launch of the 36H Group follow tighter restrictions on P2P players.

In June 2019, the FCA introduced new rules for the country’s P2P industry. The rules — which were introduced almost a full year after they were proposed and then put into effect in December — are meant to better protect investors without stifling innovation in the space.

They restrict how much retail investors can put into these platforms — 10% of investible assets — and set other requirements on P2P platforms. These rules follow a turbulent period for the UK’s P2P segment as well as criticism of the FCA after the collapse of two platforms, Lendy and Collateral, left thousands of investors facing millions in losses.

With the FCA bringing the P2P industry under its regulatory purview, members of the P2PFA group saw its work as complete. The group, founded in 2011, pushed for industry regulation and the establishment of operating standards for members. Given that the FCA has introduced specific regulations for the industry, the P2PFA’s work is complete, Crosswell told The Times.

The latest news suggests the UK P2P lending segment is maturing, but there are plenty of challenges ahead. The FCA’s regulations can help the P2P industry clean up the issues that have plagued it in recent years and get it back on track toward becoming a mainstream investment option.

Yet, players in the P2P space will likely face a slew of challenges — not least because “Entrepreneurs often haven’t had experience of dealing with the FCA,” Mark Turner, managing director at Duff & Phelps, told The Times.

It’ll be vital for the 36H Group to become a conduit between these startups and regulatory bodies to ensure challenges can be identified and managed before they spiral out of control, especially since failures at one P2P platform will likely spread negative sentiment across the whole industry.

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