On 1 June 2016, Andrew Tyrie MP, Chairman of the Treasury Committee, wrote to the Chief Executive of the FCA, Tracey McDermott, and the Deputy Governor of the Bank of England for Prudential Regulation, Andrew Bailey, seeking action on assessing whether consumers would benefit from further regulation of the peer-to-peer (P2P) lending market.
The letters highlight the need for the FCA to pay due attention to the risks by the growth of P2P lending and related markets as well as the need for the FCA to clarify its policy on the issue.
When commenting on the correspondence, Mr Tyrie highlighted the following:
- The Government policy that allows P2P investments to form part of an ISA allowance represents a form of official support for investments which may carry a higher risk.
- P2P loans are estimated to have totalled £4.4bn in the final quarter of 2015.
- The need for consideration to be given to whether investors could benefit from stronger consumer protection.
- The risk that poorly informed investors may be left with a false sense of security about the balance of risks versus returns.
- The fact that regulation may not be the answer, instead an increase in competition may offer benefits to the consumer.
Mr Tyrie emphasised that it is crucial that the regulator finds the right balance between these risks and opportunities.