Published on January 7th, 2020 | by Jenny0
What the new rules on peer to peer lending mean for you and your portfolio
As we progress into the New Year many will be looking to get a grip on their finances with a view on increasing their financial security in 2020. With millions now invested in the peer to peer lending market increased regulation is changing the way, many are managing their money. A recently introduced regulation now stipulates that if you have not sought out expert financial advice you can only invest up to 10% of your total investable assets. Here is what this and other new regulations mean for your peer to peer portfolio.
- The 10% rule will lead to more due diligence for providers
This rule is trying to promote a more educated view of peer to peer lending among investors who may not be well versed in the market. If you are looking to invest a larger percentage of your portfolio, once you have made two investments over a two year period, and the cap will be lifted. It is also worth stating that the cap will not apply to individuals with high net-worth or more expert investing companies.
- Higher FCA regulation appears to be managing the market well
The 10% regulation is only one of the new steps that have been taken by the FCA to try and improve the transparency of the peer to peer market. It is fair to say providers are stepping up to the plate with more information being displayed on the site and more due diligence being done on their part.
For regulators, the peer to peer market is a tricky one; introducing strict changes could cause people to take a lot of their money out, and stifle the innovation of the new industry. Equally, deregulation could leave ordinary investors exposed to a higher risk with mismatched returns potential. The current regulations appear to be finding the right balance.
Start seeking out expert advice on peer to peer lending
The new rules are trying to encourage smaller investors to try and become more knowledgeable of peer to peer lending before they invest in it. Browsing some of our articles and conducting some wider research on the internet will act as a good starting point if you are looking to increase your investing in the peer to peer market.
Feel free to get in contact if you have any further questions on the subject or are seeking some further clarification on the new changes.