Peer-to-peer (P2P) lenders use digital platforms to connect borrowers and investors — that's in contrast to banks which lend out customers' deposits. BI Intelligence forecasts that UK P2P lending will grow at a 45% five-year compound annual growth rate, reaching £16 billion ($23 billion) by 2020.
The UK’s Financial Conduct Authority (FCA) has been actively regulating equity based crowdfunding since 2014, and it started to regulate P2P lending at the same time. In 2013, many commentators argued that the FCA’s proposed rules were too strict, and would strangle a nascent industry at birth. Today: 91% of P2P lending platforms regard the FCA’s rules as adequate and appropriate; 5.66% think they should be tighter and stricter; and less than 4% regard them as excessive. The equivalent numbers for equity based crowdfunding platforms are 89%, 8% and 3% (respectively). These numbers change materially, if platforms are asked about the FCA’s online and social media financial promotion rules. Here the equivalent numbers are 77% (“adequate and appropriate”), 2% (“should be tighter and stricter”), and 21% (“excessive and too strict”). This is unsurprising, given (what some might regard as) the unexpected effect of the FCA’s social media financial promotions rules.