The Lending Club saga has had reverberations across the pond, according to Reuters.
As noted by the newswire on Tuesday (May 10), the fact that Lending Club has been staggered by the revelations that loans were sold without meeting investor criteria could mean that scrutiny could tighten in the United Kingdom. The country has proven to have one of the biggest peer-to-peer lending arenas within Europe, a landscape dotted by players, such as Funding Circle, bringing, collectively, $9 billion to the marketplace. And, as in the United States, online lending has been seen as a valuable conduit for getting funding in place to smaller businesses or startups.
Regulation within the U.K. is also relatively more comprehensive than might be seen elsewhere, with the U.S. Treasury Department stating that more regulation and oversight of online lending in the U.S. is warranted. In the U.K., there is the Financial Conduct Authority, which has set forth rules tied specifically to the P2P industry. The rules mandate, sources told Reuters, specific levels of risk and other factors, which would mean that some of the violations cited in Lending Club’s case earlier in the week would not happen in the U.K. In addition, lenders in Britain can seek remedy under rules that govern damages in the case of unsuitable financial advice.
Lending Club’s issues, should the probe be industry-wide or simply more widespread, would imply some greater regulatory scrutiny. But, for now, applications proceed apace within Britain to do business in the country as a P2P lender, even as growth has been slowing to the low single digits, according to sources within the industry.