We are consulting on changing our client money rules for firms that operate electronic systems in relation to lending (P2P platforms) and hold both money for clients in relation to regulated P2P agreements under our client money rules (CASS 7) and money for clients in relation to unregulated lending.
Why are we issuing this consultation paper?
Currently, an investor’s money held by a firm in relation to P2P agreements (money to be lent or received in repayments) must be segregated from the firm’s own money and any other money, including in relation to unregulated business to business lending (B2B agreements).
We understand that some firms consider this burdensome as firms in the P2P industry have generally not developed systems to distinguish between money held for the purposes of P2P agreements and money held for B2B agreements.
We propose to allow firms that hold money in relation to both P2P and B2B agreements to be able to elect to hold both kinds under CASS 7 if they wish to do so. Firms may then segregate P2P and B2B monies together, but separately from the firms’ money, without breaching CASS 7.
CP16/4: Loan-based crowdfunding platforms and segregation of client money [PDF]
Who does this consultation affect?
This paper will be of interest to:
- consumers and consumer organisations
- financial advisers
- firms operating loan-based crowdfunding platforms
- firms that wish to manage Innovative Finance ISAs
- trade bodies that represent stakeholders in this market
- compliance consultants and other firms that assist stakeholders
Next steps
The consultation period for this paper ended on 11 February 2016.