26th March 2012:
The P2P Finance Association, the trade body representing leading UK peer-to-peer (P2P) financial businesses, has today welcomed Government approval of the Association’s Rules and Operating Principles. These Principles, which Association members have to adhere to, set out key requirements to ensure transparent, fair, robust and orderly operation of their platforms to protect both savers and borrowers.
The Department for Business, Innovation & Skills, when responding to the recent ‘non-bank lending taskforce’ report by Tim Breedon, backed the establishment of a P2P industry code as a means to raise awareness of P2P finance, but also safeguard usersi. Giles Andrews, Chair of the P2P Finance Association said: ‘This is a hugely exciting sector, and one that has experienced significant growth over recent years.
The P2P Finance Association has established strict operating principles to ensure a level of uniformity amongst members which in turn will reassure and protect our users. We are delighted that the Government has endorsed the development of our industry body and code of practice’.
In response to the news that startup peer-to-peer lender ‘Quakle’ has closed, Chairman of the Peer-to-Peer Finance Association Giles Andrews said: “Quakle was not a member of the Peer-to-Peer Finance Association. We spoke to them about joining but they said they were not able to adhere to the Association’s strict Rules and Operating Principles. These were established to provide robust consumer protection in the current absence of appropriate regulation.
The Association continues to lobby actively for formal regulation to be established and is hopeful that this will happen in time. Quakle was tiny – its loans represented less than 1/100th of 1% of total UK peer-to-peer lending. Members of the Peer-to-Peer Finance Association (Zopa, RateSetter and Funding Circle) are all well-capitalised businesses that use rigorous credit risk assessment processes and criteria to ensure that only creditworthy and reliable individuals and businesses can secure a loan.
These thorough and sensible business practices have proven to be extremely effective – including keeping default rates extremely low – to the benefit of lenders, borrowers and the prospects for peer-to-peer finance in the future.