Ablrate suspends loan exchange amid FCA dispute
Ablrate will temporarily suspend its loan exchange from 10am on Friday 8 April, due to a disagreement between the peer-to-peer lending platform and the City regulator.
David Bradley-Ward, founder and chief executive of Ablrate, told Peer2Peer Finance News that the Financial Conduct Authority (FCA) had raised questions about the operations of the platform’s secondary market, as part of an industry-wide investigation into secondary market liquidity.
“The FCA are aggressively looking at the P2P industry,” he said.
“The FCA have questioned the operations of our secondary market so we have temporarily suspended it while we agree on a route forward.
“We have taken expert legal advice and feel our position is very strong. The practical operation of our secondary market is unique and it is this that the FCA have not understood at this time.”
Ablrate’s secondary market has provided tens of millions in liquidity. However, P2P secondary markets have been the subject of FCA scrutiny. Last year, the regulator told P2P platforms they should price all of their secondary market transactions fairly or risk losing their secondary market privileges.
In a message to investors, Bradley-Ward said that the suspension “appears to be connected to a wider, more aggressive strategy aimed at the P2P industry and other industry classed as ‘high risk’ by the regulator.”
Read more: 36H Group lobbies the FCA to lower its risk warnings for P2P
Bradley-Ward added that Ablrate’s loan exchange was initially created as a result of discussions with the FCA in 2016.
“The FCA wanted a solution that solved the issue of unregulated loans (between two limited companies, or over £25,000) being traded with retail lenders,” he explained.
“This was to avoid the issue where a retail lender could not place an unregulated loan into a SIPP or an IFISA. This was solved by our agreement system which creates a whole new agreement when a loan is bought or sold on the loan exchange with a new agreement downloadable by lenders.
“Our interpretation of the rules is, we believe, solid and our legal opinion confirms this but out of respect for the FCA and in the spirit of cooperation we will be bringing in the temporary suspension on Friday while we argue our position.”
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