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ISSUE 82 | JUNE 2023
Revealed: Secret talks underway to roll back financial promotion rules REPRESENTATIVES from the peer-to-peer lending community have been in secret talks with government officials and regulators about rolling back some of the new financial promotions rules, Peer2Peer Finance News can exclusively reveal. A number of closed door meetings have already taken place to discuss the impact that the new regulations have had on the P2P sector and retail investors. Peer2Peer Finance News understands that approximately 30 Financial Conduct Authority (FCA) representatives attended a meeting with P2P industry executives in May to discuss the impact of the rules. Platforms shared data with the regulator showing that some of the changes are having a negative impact on their business by discouraging would-be investors. “We raised our concerns and wanted to try to understand how the
FCA would view the data that we have and whether this is a problem in terms of policy,” said one P2P stakeholder who attended the meeting. The FCA was described as being “defensive” in its response. “Addressing the harm from high risk investments is a key part of our consumer investments strategy,” the FCA has previously said. “Long term social and economic changes have made the consumer investment market more important than ever. Consumers are increasingly responsible
for making complex decisions about how they invest their long term savings for life events and to support themselves in later life. There is more choice of products and services than ever before. It is increasingly easy to target consumers with adverts for high risk investments online.” The regulator has previously stated that its long-term aim is to improve consumer outcomes by halving the number of vulnerable people who are making inappropriately highrisk investments. Last year, the FCA
unveiled new financial promotion rules for highrisk investments, which were designed to ensure that only suitable investors access these products. All P2P platforms now have to carry a prominent risk warning on their website, investor incentives have been banned and the requirements around appropriateness tests have been strengthened. The risk warnings came into effect last December, and all other rules came into effect on 1 February this year. The most controversial rule involves a 24-hour cooling off period. This begins when the consumer requests to view a direct offer financial promotion. From this point, P2P lending platforms are not allowed to show consumers the relevant financial promotion until at least 24 hours have elapsed. However, they can proceed with other parts of the consumer journey, including >> 4