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P2P - existential crisis or coming of age?

Chris Laverty Chris Laverty

According to The Times, the P2P market is facing an ‘existential crisis’ – and most people can agree that 2019 was indeed a turbulent year for the industry.

Others however, including the CEO of RateSetter quoted in p2pfinance news, prefer to describe the new rules and regulations that were introduced on December 9 as a ‘coming of age’ moment for the sector, with the changes bringing a new legitimacy to the sector to start the new decade1.

Industry players are well aware that they have new operational parameters to abide with: the requirements of comprehensive wind-down planning, adhering to the Senior Managers & Certification Regime (SMCR) and ensuring all platforms have appropriateness tests for new investors. In addition, retail investors must pledge to put no more than 10% of their net portfolio into P2P loans.

In December, both ThinCats and Landbay chose to exit the P2P market by moving to an institutional only funding model. MoneyThing is also winding down its loan book to ensure the best possible outcome for investors. These closures come after the insolvencies of Lendy and FundingSecure.

Moody’s believes that the new rules are ‘credit positive’ for the P2P sector. Indeed, improved requirements for credit risk assessment and governance standards, wind-down plans and increased disclosure all strengthen the operational environment for the sector, which is ultimately what is needed to keep the appeal to both institutional and retail investment.

Is this a fork in the road for the P2P industry? Some players may follow ThinCats and Landbay’s lead and choose to stop taking retail money in order to avoid the cumbersome compliance burden, or exit the business in order to preserve value for stakeholders. Other firms are viewing this point in time as a huge opportunity to create the right governance structures, processes and controls that their firm needs to strengthen and thrive in this sector.

We can provide advice on implementing regulatory requirements, improving controls, risk management and governance procedures and can help management look at their strategic options in order to develop contingency plans that might be required. Where relevant, we are able to assist in exiting the business entirely with minimum disruption.

For more information and advice, please contact Chris Laverty or Dean Walsh in our financial services restructuring team.


  1. RateSetter: P2P lending approaching ‘watershed moment’, Peer2Peer Finance News, December 2019
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