Investors asked for views on risks and rewards from P2P lending

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Peer-to-peer investors are being asked to give their views on the asset class as part of the UK Crowdfunding Association’s (UKCFA) response to the Financial Conduct Authority’s (FCA) proposed clampdown on marketing restrictions.

The City watchdog published proposals in April to strengthen its financial promotion rules for high-risk investments, including peer-to-peer lending.

UKCFA members including Abundance and Rebuildingsociety have written to investors to get their views on P2P lending that will be used as part of the trade body’s feedback when it responds to the FCA’s discussion paper.

Investors have been sent an online survey with 24 questions that cover issues such as the type of P2P product they have, whether they hold an Innovative Finance ISA or general account and other financial products they have money in.

Read more: How the FCA is tackling consumer investments

Users are also asked about how they use P2P lending, such as for long term investing or for a particular goal.

The survey also seeks views on the risks of P2P lending and how well they are explained.

“The aim of the survey is to provide opportunity for customers of platforms to express their views on the proposed rule changes and also to provide additional insight into how well informed they feel about risks,” Bruce Davis, managing director of Abundance, told Peer2Peer Finance News.

The regulator’s discussion paper seeking views on three areas with the aim of better protecting retail customers.

The three areas are: the classification of high-risk investments; further segmenting the high-risk investments market; and the approval of financial promotions.

The FCA is seeking views on whether more types of investments should be subject to marketing restrictions and what marketing restrictions should apply.

Read more: P2P sector blasts “disappointing” plans for new consumer investment rules

It is planning to strengthen its rules to further segment high-risk investments from other investments and is seeking views on how best to achieve this.

The regulator said this is because it is still is seeing too many consumers investing in inappropriate high-risk investments which do not meet their needs.

The FCA is also considering what improvements could be made to risk warnings, which are often perceived as white noise to many investors and often do not convey the genuine possibility of an investment loss, and whether firms should make investors watch educational videos before investing.

Furthermore, the FCA is seeking views on whether there should be more requirements for these firms to monitor a financial promotion on an ongoing basis to ensure it remains clear, fair and not misleading.


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Read More:Investors asked for views on risks and rewards from P2P lending