P2P sector “better informed” after rule changes
The peer-to-peer lending sector has become a “better informed” space after years of regulatory change, industry experts claim.
Geoff Bouchier and Mark Turner of financial consultancy Kroll, which has worked with a range of P2P platforms on restructuring, financing and regulatory issues, said the industry is well placed to support borrowers.
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“The market continues to mature,” said Bouchier, managing director, restructuring advisory at Kroll.
“It is becoming a better-informed space. There are numerous participants so it is rather competitive for lenders. There is greater regulation and expectation on platforms.”
Bouchier predicted that there will be “huge demand” for P2P lending due to macro events.
“The challenge for P2P lenders will be to make sure they select and fund the right businesses rather than those teetering that have gone too far,” he said.
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Bouchier said there has been a transition of what P2P lending means, with a shift to institutional investment as it is seen as easier to coordinate amid increased regulations.
He noted that the P2P lending sector had participated in state emergency funding schemes and predicted that platforms will attract interest from borrowers who need to refinance debt from those schemes.
“The government-supported lending schemes will need to be replaced by either retail or institutional lenders,” Bouchier said. “The platforms will have that business for refinancing, it will keep them in healthy trade.”
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Turner, managing director, financial services compliance and regulation at Kroll, said that a growing area of work for the business is regulatory horizon scanning.
“It is not as dull as it sounds,” he said. “We don’t just say, ‘here is a list of 100 regulations that are coming’, we are looking at the direction of travel and reading between the lines.
“Our work looks at the challenges for different business models and products, and engages with company boards on what this could mean for them.”