P2P Crowd Hits Back At Ex-Regulator's 'Scathing Comments'


Heads of a number of peer-to-peer lending platforms have hit back at scathing comments made against the industry by a former regulator, writes Catherine Denham in FT Adviser. We believe Ms Denham reprises comments made at a recent P2PFA breakfast.

Money&Co. has contacted the producers of the BBC Radio 4 Today programme, to register our disquiet at the Lord Turner interview. We are currently researching a riposte to be published in the mainstream media.

"Christine Farnish, chair of the Peer-to-Peer Finance Association (P2PFA), said these comments were made 'off-the-cuff' and, from her understanding, were later regretted by Lord Turner," says FT Adviser.

"During a P2P conference last week, various heads of P2P lending platforms addressed the former Financial Service Authority chairman's criticisms and explained how they manage credit risk on their platform.

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"Nick Harding, chief executive of Lending Works, said he would be "staggered" if any bank or building society were doing anything more than the credit underwriting processes the P2P platforms are doing.

"He said: 'It starts with employing the best people to build credit models and systems and do the credit underwriting, and the vast majority most of the people doing this have been head-hunted by banks.

"'We have spent a huge amount of time and effort making sure those systems are as efficient and robust as possible.'

"Rhydian Lewis, chief executive of RateSetter, said Lord Turner's criticism referred mainly to small businesses and automation.

"He said: 'Everyone would accept that consumer credit can be very heavily automated, but if you ask me I suspect most banks are automated more than Ratesetter.

"'With small businesses lending, we talk to them and make sure we get all sorts of financial information from them.

"'We visit a lot more of them than most banks would consider worthwhile visiting, so I think it is a very different process to what Adair Turner thinks is running behind the scenes.'

"Anil Stocker, chief executive of Market Invoice, said risk management is crucial to the value of the business but added he 'categorically disagrees' with the idea of visiting businesses.

"He said it is far more important to check the data online.

"'We have been through multiple iterations of our risk model and we're using cutting edge technology and data,' he said, claiming he is collecting more data sources than any bank underwriting system.

"Mr Stocker also claimed platforms are more transparent than existing financial institutions.

"James Meekings, co-founder and UK managing director of Funding Circle, said the challenge was partly that all P2P platforms are so different.

"'The truth is, on the small business side you can automate some things and not others," he said, describing the Funding Circle process as data-rich process, while also using the expertise of 30 underwriters.'"

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Money&Co.'s Credit Rating Process

As we recently explained in a circular to registered users, we hold our borrowers up to what we believe to be the highest levels of scrutiny in the P2P sector. That means that sometimes there is a hiatus – as at present – in the pipeline as we do our due diligence.

Please be mindful of the risks associated with P2P (see FAQs) as well as the good returns to be had:See here the latest of several articles (links to earlier pieces are embedded in this one).Our lenders have achieved an average gross return of over 9 per cent since we began facilitating loans in April 2014.

Entrepreneurs and SMEs looking to borrow from Money&Co. should click here. Facts and tips about crowdfunding in general are available by reading our knowledge hub, here.

To learn more about getting good returns on capital potential lenders should click here.Remember, when lending your capital is at risk – please read the warnings on our Home, Lend and Frequently Asked Questions pages.



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