The FCA has published a “Statement on Peer-to-Peer applications for full authorisation“.

As at 30 March 2016:

  • 8 Peer-to-Peer (P2P) lending platforms had been fully authorised by the FCA;
  • 44 were operating under an interim permission, which is keeping their respective Office of Fair Trading consumer credit licences alive, until the FCA decides whether to authorise them (or not); and
  • 42 had applied for an FCA authorisation, and their applications were still pending.

As the FCA notes, “Only P2P loans on platforms operated by firms with full authorisation [are] eligible investments for the Innovative Finance ISA“, which (at least from a tax perspective) became available for the first time this morning.

In its statement, the FCA is at pains to point out that, “How long it takes to consider an application depends on … the completeness of the application, the complexity of the business, and the firm’s demonstrated compliance with regulatory requirements“. P2P platforms are not usually complex businesses, so a lot can turn on how complete the firm’s application is; and how well it can demonstrate compliance with the FCA’s requirements. This matters because the FCA has 6 months to make a decision on a “complete application“; and 12 months to make a decision in every other case. Preparing and submitting a “complete application” might sound easy enough – but the application forms don’t always mean what they say, or say what they mean; and the FCA’s questions are often technical and ambiguous. So firms can save a lot of time and money by asking an experienced professional to check their application pack for accuracy and completeness before it’s submitted. Cooley can provide this service, when it’s required.

In the meantime, HM Revenue & Customs has issued its final guidance about income tax relief on irrecoverable P2P loans. The guidance confirms that, if certain tests are met, the new “relief [will] ensure that people who invest in P2P loans are [only] subject to tax on the return … they make from their lending portfolio as a whole. This … create[s] a level playing field for the taxation of income from P2P lending when compared to the taxation of traditional forms of retail investment and bring[s] the tax position of the peer to peer sector in[to] line with other forms of investment products available for individuals to purchase“.