The Peer-to-Peer Finance Association (P2PFA) has published its data for the UK P2P lending market as well as issuing new transparency standards. The P2PFA is a self-regulatory group that was founded in 2011 to boost awareness of P2P lending, as well as create standards of business conduct for the new alternative finance product in the UK.
During the quarter, new lending among its members increased 19.7% to £607.3 million from £507.3 million in Q2 2015. Altogether for 2015, £1.58 billion has been lent for the year. On track to surpass £2 billion in total new loans for the full year, the total for 2015 may eclipse £2.18 billion, which was the total cumulative lending that took place among P2PFA members in all years prior to 2015.
Helping fuel the growth has been a sharp increase in the number of borrowers. During Q3, there were 225,064 current borrowers on P2P lending platforms. This was a 19% increase from Q2 and 61% above the end of 2014 results.
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Among individual P2P platform operators, Zopa, which recently surpassed £1 billion in cumulative lending, led the UK market in new loans. During the quarter, £160.6 million in new loans were processed. Behind them was Funding Circle with £146.1 million in new deals transacted on its platform. In third spot was RateSetter which has £127.4 million in new loans. At over £800 million in cumulative lending, both Funding Circle and RateSetter are nearing the £1 billion barrier in total loans which they may achieve in Q4 of this year or beginning of 2016.
The top three UK P2P lending firms also portray three different lending models. For Zopa, its growth has exclusively taken place in the consumer loan market. On the other hand, Funding Circle has stayed clear of the consumer space, with its lending focused on small and medium enterprises. For RateSetter, it is incorporating a hybrid model as it lends to both consumers and businesses.
While Lending Circle appears set to remain for at least the intermediate term on SMEs, having formed numerous partnerships with services that support this market, Zopa could be soon entering the business loan sector. While not yet divulging specific plans, in August, Zopa Founder Andrew Giles stepped down from the day to day CEO position to become Executive Chairman. By relinquishing control of day to day operations, Giles was expected to focus on external activities including third party partnerships, which could include services to SMEs.
In addition to reporting Q3 statistics, the P2PFA also announced new standards for its members. The new measures include publishing debt data to common standards, initiating transparency of loan books and ensuring retail and institutional investors are on a “level playing field”. The latter measure is meant to discourage favoring larger institutional investors by allowing them to invest in loans earlier or with more information than retail investors.
About the new initiatives, Christine Farnish, Chair of the P2PFA, stated: “Our new Operating Principles set a benchmark of fair dealing and transparency. By the New Year, all our members will publish their full loan books, show bad debt losses in a comparable way, and commit to enuring that retail investors get a fair deal compared with institutions.”