Total lending supplied by P2P Finance Association members surpassed £10 billion in the last quarter of 2018 with most lending going to small businesses. This clearly demonstrates the importance of P2P in developing and nurturing existing businesses in a difficult economy. The part played by thousands of individual lenders play in the UK economy is considerable and should be loudly applauded.
The 5th UK Alternative Finance Industry Report by the Cambridge Centre for Alternative Finance (CCAF) finds that the UK online alternative finance market volume grew by a whopping 35 percent in 2017. Peer-to-peer business lending has become an increasingly important part of overall financing of smaller British businesses, according to the report.
Peer-to-peer (P2P) business lending retained the top spot as the largest market segment in online alternative finance, with £2 billion in transaction volume in 2017 and 65 per cent year-on-year growth. Assuming that the vast majority of P2P business borrowers are small businesses with turnover of less than £2 million, P2P business lending was estimated to be equivalent of 29.2 per cent of all new bank loans to small businesses in 2017 – nearly double the 15.3 per cent figure in 2016.
“P2P business lending is becoming an increasingly important contributor to overall SME financing in the UK,” the report says.
Following P2P business lending at £2 billion, the largest UK alternative finance categories in 2017 were P2P consumer lending at £1.4 billion, followed by P2P property lending at £1.2 billion and invoice trading at £787 million.
Christopher Woolard (Exec Director of Strategy and Competition at the FCA) has been sharing his thoughts on the rise of cryptocurrencies. He points out that since 2008 (at the height of the banking crisis) there was a white-paper on the original Bitcoin but 10 years on, there are over 2,000 variants. A task-force combining the FCA, HM Treasury and the Bank of England have identified 3 possible harms:
• Concern that retail consumers are being sold complex and volatile products
• Risk of financial crime
• Harm to market integrity.
The suggestion is that crypto companies, including those offering P2P lending, could face more stringent anti-money laundering (AML) regulations, as the government considers transferring compliance oversight to the City watchdog.
“To help firms better understand the boundaries of current regulation in relation to crypto-assets, the FCA will consult on perimeter guidance by the end of 2018.
Given that both UK firms and consumers are likely to experiment with current and future generations of crypto-assets, it’s vital we head off risks.” However, the task-force recognises that this is not just a domestic issue, but that regulatory bodies must work together internationally.