The peer-to-peer lending industry has long been given an enhancement of confidence since the government began legislating to describe that no company borrowing by using a peer-to-peer platform has to be regulated as the ‘deposit taker’ (often referred to as a ‘banking licence’) unless which is their core business.
The legislation will guarantee which the industry can continue to thrive and innovate while still taking advantage of the UK’s good quality regulatory standards.
The draft legislation provides certainty for UK businesses across a range of sectors including manufacturing, construction, and hospitality who finance their growth with peer-to-peer lending. Without it legislation, peer-to-peer platforms lacked clarity on whether some of their borrowers would require a ‘banking licence’ to borrow through their platform. This is able to have dramatically increased costs for platforms and borrowers, and impacted the sustainability of peer-to-peer business models, lowering the finance on the market to businesses.
Stephen Barclay, economic downturn and the Secretary for the Treasury, said: “Peer-to-peer lending has taken about real benefits, not simply to your UK’s medium and small sized business community, but our economy most importantly. This vital clarification indicates that companies can nevertheless access the finance they should be grow and expand, helping us to create an economy that could be fit into the future.
“Peer-to-peer lending is undoubtedly an increasingly important way to obtain funding for UK businesses, especially small establishments. In 2016 over 1.2 billion of finance for businesses was facilitated from the peer-to-peer industry, and yes it provided the equivalent of 15% coming from all new bank lending to small companies.