Treasury announce new regulation of P2P lending at Finance Lab Summit
Developments in the peer to peer finance world are continuing to accelerate after the Peer-to-Peer Finance Policy Summit that The Finance Lab held on December 7th, in partnership with Keystone Law and Nesta. At the summit itself, the industry published an open letter calling on policymakers in Europe and the UK to create a clear regulatory framework to allow the sector to grow to its full potential. Then at the beginning of the day, the Treasury announced that it will be regulating the peer-to-peer lending industry from 2014. This is a major development from a government previously opposed to creating such regulation. Since then, government has also announced that some of its lending to small business will be going through Funding Circle. Zopa has also now said it will begin lending to businesses as well as individuals.
The surprise Treasury announcement set the tone for the day which had a real sense of momentum behind an industry not only establishing itself as an efficient way of transferring capital from savers to borrowers, without the intermediation of banks, but also a policymaking community that was waking up to the economic potential and regulatory implications. Baroness Kramer spoke of a ‘transformation in attitudes in HM Treasury and FSA” towards alternative finance and challengers to the banking status quo. Giles Andrews of Zopa also expressed his sense that the industry had arrived as a genuine player in finance. Other speakers chaired by the BBC’s Stephanie Flanders, included Darren Westlake of Crowdcube, who pointed out that whilst the UK still had the most established peer-to-peer and crowdfunding sector, both the US and Canada were now setting out a regulatory framework which would give their industries more certainty on which to grow. Could we see a global ‘race to the top’ for financial regulation to enable a growth in alternative finance, in contrast to the previous deregulatory trends? The final main panellist was Graeme Fisher from the Federation of Small Business, highlighting the yawning funding gap for businesses that traditional banks seem unable to bridge.
In the coming weeks we will release video clips of the speeches and some of the outputs from the fruitful table discussions between P2P industry players and policymakers.