Not long now until the deadline for implementing new FCA regulations for Peer-to-Peer Lending. All platforms will need to ask more questions of their existing Lenders going forward, but by adopting the appropriateness testing requirements a month in advance, we hope we have eased some of the pressure off Proplenders – giving them more time to respond.
Our sincere thanks to all retail account holders who have certified their investor type and attempted the test already. While many passed our appropriateness first time, you certainly wouldn’t have been alone if you took two or more attempts to pass – or are still to pass.
We’re glad to hear that the short P2P Lending Summary we made available prior to the test, proved useful. “I wish I’d read it before my first attempt”, was fed back to our Lender Team a number of times. Worth considering certainly, for those that intend to attempt (or re-attempt) the test before 9 December.
If you’re yet to categorise and attempt our multiple-choice test, let us reassure you that answering the 8-questions should take no longer than 5 minutes – perhaps 5 minutes more if you’re reading the summary. Responses offered for some of the questions may be subtly different, but there are no trick questions and no repercussions if you need more than one attempt.
We’ve built some automatic waiting periods in-between attempts, to give you time to review the test feedback provided and re-familiarise yourself with the specifics of the Proplend platform – and wider risks of P2P Lending. You are Lending direct to the Borrower and your capital is at risk (and returns could vary) because they could default on the loan, but there are other underlying risks, including fraud and difficulty exercising our first charge security, that we also need to check Lenders’ understanding of.
If you want to re-attempt the test sooner – just let us know. We expect you’ll be keen to pass the test ASAP to ensure you’ll continue to receive our new loan notifications and can continue to review Pending loans via your dashboard. It’s worth re-iterating, you will be unable to fund your Proplend account(s) or make new loan investments via the platform until you have both categorised AND passed our appropriateness test.
– – – – – – – – – – – – –
Restricted Access to Lender dashboards until you have passed our test
As well as not being able to invest until you have evidenced appropriateness, we will need to restrict access to loan-specific pages of Lender dashboards as these pages constitute Direct Offer Financial Promotions. The graphic illustrates what you can and can’t do whilst you have restricted access.
Where you have multiple accounts with us, perhaps a Classic and an ISA, you will only need to pass the test once to have ‘Full’ dashboard access again. Categorisation will be an annual requirement, but you can re-categorise at any time from your dashboard. For those of you that have past experience of P2P Lending, or build up that experience over the coming year, you can certify yourself as a ‘Sophisticated Investor’ having invested in two or more loans during the last 24 months.
– – – – – – – – – – – – –
Proplend is fully supportive of the spirit of the FCA regulations in holding platforms to higher, common standards and trying to ensure that only retail consumers capable of understanding the risks (and bearing potential consequences) invest in P2P loans.
Whilst the fundamental principles and risks of Peer-to-Peer Lending are the same, every platform works differently and takes differing approaches to underwriting and risk mitigation. Backed by a first charge over commercial property with an average loan to value of just over 62%, Proplend has always erred on the side of caution when it comes to the loans and Borrowers it has facilitated.
We don’t do development loans (as we consider these to be too risky for our platform) and we only list a small proportion of the loans that are offered to us. We’re very protective of Proplenders and proud of track record of no investor losses in our 5 years to date. We remain committed to offering appropriately risk-adjusted lending opportunities to appropriately knowledgeable Lenders.
