Peer to peer lenders adjust FCA applications to suit needs

According to financial services regulatory consultancy Bovill, 30 of the 114 applications from new peer-to-peer lenders have been withdrawn.

Gillian Roche-Saunders, head of venture finance at Bovill, had said that that the withdrawals reflect tougher authorisation rules.

"The high number of withdrawals suggests that the FCA is setting the bar high when it comes to full authorisation for P2P lenders. The process appears to be much tougher and more costly than many firms first anticipated," she said.

"P2P lenders have enjoyed a relatively light touch approach from the regulator for some time. A rigorous authorisation process will have come as a shock to the system, particularly for smaller and less profitable lenders," Roche-Saunders said.

But the FCA told Out-Law.com that 23 of the 30 withdrawals were only partial, as lenders withdrew some regulated activities from their application but proceeded with their applications for other regulated activities.

"This is likely to be because the permission was not the right one for the firm, and another better reflected the actual activity they undertake," an FCA spokesperson said.

Many of the consumer credit firms making applications are not sure what permissions are right for them, or may be applying for permissions that they will not use immediately but might wish to in future, the spokesperson said.

After discussion with the FCA, firms may see that they have applied for the wrong permission or decide that they don't want to pay for permission that they won't use immediately, and so make a partial withdrawal, the FCA said.

Interim permission was given to 178 pre-existing peer-to-peer lenders, allowing them to continue to operate as responsibility for regulation was transferred to from the Office of Fair Trading to the FCA, Bovill said.