Saturday, 2 November 2013

The Middleman Strikes Back.

When I first learnt about peer-to-peer lending, I thought, "Oh dear, the banks aren't going to like that, I wonder how long it will be until they get their mates in the government to put a stop to it."

Now the fightback has started. As Matthew Lynn points out in Moneyweek "P2P is doing to finance what the web has done to dozens of other industries, - cutting out the middlemen" and then, unsurprisingly: "From April next year, the fast-growing P2P lending and crowd-funding industries will start being regulated by the Financial Conduct Authority".

The FCA, of course professes that they are trying to protect investors from taking "inappropriate" levels of risk, whatever that may mean, but it is fairly obvious that they are just doing the job of every regulator, which is to protect incumbents from nasty upstart competitors by raising barriers to entry, one of the only things the FCA and its predecessor, the FSA, manages to do with any degree of success.

As Matthew Lynn points out "Indeed, if there is anything customers need protecting from, it is the traditional banks and fund managers, not the people offering a better deal than they do."


Mark Wadsworth said...

Can you stick in a link to the article or is it paywalled?

Bayard said...

It doesn't even appear in the online version, which is, anyway, paywalled.

ThomasBHall said...

Actually, zopa and funding circle,some of the early p2p lenders,already have their own p2p association with minimum requirements to join. I know this because I looked at setting one up myself. They have been begging the regulator to regulate them for ages...
Until tradional banks have the advantages of fractional reserve rules removed,p2p which in effect is a 100% reserve bank, can't compete, I.e. banks can still give credit to their mates for rent collecting privileges cheaper.