Peer-to-peer lending triggered watchdog fears as early as 2016
Peer-to-peer lending had raised concerns for the City watchdog as early as 2016, with a swathe of issues being debated over email years before regulations were imposed.
Emails from inside the Financial Conduct Authority (FCA) suggest the regulator was not blind to the risks posed by the industry, amid struggles to promote the industry publicly while holding private concerns over consumer harm and risky pressure.
Peer-to-peer lending saw hundreds of thousands of people offering tens of billions of pounds to consumers and small businesses via online platforms.
While many enjoyed returns, others lost money when lenders collapsed.
Platforms with a quarter of a billion pounds in active loans collapsed in chaotic fashion, while many remaining players were in the process of leaving the market or were soon to do so.
The internal FCA exchanges raise fresh questions about why mismanaged platforms were allowed to continue to take money from investors.
After all, one of the emails revealed the FCA had long been harbouring concerns funds would be lost to “corner cutting and ponzi-like outcomes.”
The City regulator eventually introduced new rules for the once promising peer-to-peer lending sector in late 2019.
The correspondence was disclosed during a recent employment tribunal and first reported on by Mouse in the Court.