ASIC has released its second survey on the marketplace lending industry, which indicates steady growth in both borrowing and lending activity in the market since the last report. Marketplace lending allows investment in loans to consumers and SMEs, which can provide an alternative source of funds to traditional channels. Marketplace lending does not have a stand-alone regulatory regime in Australia, rather the regulations depend on how the business is structured and the types of financial services and products being offered.
ASIC undertook the survey to determine emerging trends and changes in the level of risk within the industry, as new technology platforms facilitate significant growth in marketplace lending. The report is based on survey responses from the providers of twelve marketplace lending platforms, representing a limited cross-section of the industry. Key findings from the report are outlined below:
- there are three new marketplace lending platforms in the industry;
- with $300 million in loans written to consumers and SMEs, there was a doubling of activity in relation to the number of borrowers and total amount borrowed since 2015-16;
- the average reported default rate across the respondents was 2.2%;
- there are an additional 4,187 retail investors since 2016, representing $12 million of extra investment in the industry; and
- loan origination fees remained the primary source of revenue for marketplace lending providers.
The report highlights instances of non-compliance with laws and regulations in relation to advertising and promotional material and disclosure documents for marketplace lending products. As the activity levels in marketplace lending continue to grow, ASIC intends to undertake further surveys in order to determine the stability of this industry.