The United Kingdom has harbored a peer-to-peer (P2P) affinity as of late, with a plethora of companies and startups now pursuing authorization to design and implement a new generation of P2P platforms – unfortunately, the existing regulatory framework by the country’s Financial Conduct Authority (FCA) has stymied authorizations, resulting in a temporary bottleneck, per a recent FCA report.
The UK is not alone in its lack of comprehensive and fluid P2P regulation, which by and large is emblematic of the fintech space as a whole. The US has dealt with a similar phenomenon, which in turn has led to a call from industry proponents to overhaul the existing framework in a bid to help streamline innovation.
P2P platforms have already benefited from a groundswell of interest in 2016, which only looks to rise as companies look to take advantage of new technology. This in turn has led to an uptick in applications for FCA authorization that to date the regulatory body has not been able to process as quickly.
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The FCA recently authorized eight firms to operate P2P platforms, given the rampant interest in facilitating payments between people or between people and various enterprises, namely as a pliable alternative to traditional banking. However, the regulatory body also reported that a staggering 86 firms still remain in line for authorization, with only 44 obtaining interim permission to actually operate.
Unfortunately for the FCA, its previous decree to engender a thorough P2P regulatory standard is at least a year away, which hampers its call to promote competition in the P2P lending industry in the interim – the queue at the FCA is only slated to rise as the regulator scrambles to process such high volumes of applications.
According to a recent FCA statement regarding the backlogged authorizations and growing queue for P2P lending applications: “We are working closely with individual firms to ensure they meet the rigorous statutory standards and are authorized as quickly as possible.”