Today the peer-to-peer lending industry was given a boost
of confidence as the government began legislating to
clarify that no business borrowing through a peer-to-peer
platform needs to be regulated as a ‘deposit taker’ (often
referred to as a ‘banking licence’) unless that is their
core business. The legislation will ensure that the
industry can continue to thrive and innovate while still
benefiting from the UK’s high quality regulatory standards.
The draft legislation will provide certainty for UK
businesses across a range of sectors including
manufacturing, construction, and hospitality who finance
their growth with peer-to-peer lending. Without this
legislation, peer-to-peer platforms lacked clarity on
whether some of their borrowers would require a ‘banking
licence’ to borrow through their platform. This would have
dramatically increased costs for platforms and borrowers,
and impacted the sustainability of peer-to-peer business
models, reducing the finance available to businesses.
, the Economic
Secretary to the Treasury, said:
Peer-to-peer lending has brought about real benefits, not
only for the UK’s small and medium sized business
community, but our economy at large. This vital
clarification will mean that businesses can continue to
access the finance they need to grow and expand, helping
us to build an economy that is fit for the future.
Peer-to-peer lending is an increasingly important source of
funding for UK businesses, especially smaller businesses.
In 2016 over £1.2 billion of finance for businesses was
facilitated by the peer-to-peer industry, and it provided
the equivalent of 15% of all new bank lending to small
businesses.
