Fibbing firms
On Wednesday, the Financial Conduct Authority (FCA) launched a "crackdown" on P2P and crowdfunding firms that lend savers' cash to companies and individuals in return for juicy interest rates, reveal Ruth Lythe and Simon Lambert on thisismoney.co.uk.
£200m
The amount LendInvest has lent to British businesses and property entrepreneurs since its launch in May 2013
In a recent
review, the City watchdog found some firms guilty of comparing the safety of their money to that of cash guaranteed in a savings account, Lythe and Lambert report. As the Financial Services Compensation Scheme safety net (which protects an individual's savings of up to £85,000 in a bank account in the event of a crisis) does not apply to these types of investments, lenders are in danger of being misled.
"The FCA's report also warned many firms water down the risks to your money, cherry-pick information to give a misleadingly upbeat outlook and lack balance when highlighting the prospects for returns," they add.
thisismoney.co.uk article
Carrying on
JD Alois also reports on the FCA's review for crowdfundinsider.com, but seems less concerned by the watchdog's findings. The FCA initially
published crowdfunding regulations in March 2014, Alois points out, and little is set to change following Wednesday's review.
"In stark contrast to some other markets, including the United States, the FCA made a conscious decision to allow the nascent industry to grow and evolve without debilitating rules," says Alois. Despite raising concerns about the integrity of some P2P lending and crowdfunding firms, the watchdog claims it sees "no need to alter course" at present.
"The FCA has established an active and ongoing communication process with all UK platforms," says Alois, noting that the FCA recognises that "these companies must be part of the conversation and regulations are NOT a one-way path."
crowdfundinsider.com piece
Success story
The FCA's sharpened focus on crowdfunding and P2P lending reflects the growth of P2P companies such as LendInvest. "The firm has now lent more than £200m to British businesses and property entrepreneurs - something that took the Lending Club in the US over four-and-a-half years to do," writes mortgageintroducer.com's Robyn Hall.
The company launched just 19 months ago "as a peer-to-peer marketplace lending platform focused on the mortgage market," says Hall. Allowing lenders to invest in online loans secured against property, it is now the fourth-largest platform in the UK.
Speaking to Hall, Christian Faes, LendInvest's Chief Executive Officer, said: "Whilst we're actually quite concerned about the peer-to-peer market and platforms that are simply chasing volume, we do think that our story is quite different."
Faes adds: "We are finding that LendInvest has become very popular with investors, as it provides superior risk adjusted returns that are secured against property."
mortgageintroducer.com story
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