Restrictions Lifted on Brokers Promoting P2P Finance

 

The alternative finance industry has struggled to build awareness, understanding, and trust about its platforms and products among SMEs. Countless industry reports highlight the lack of information about peer-to-peer finance (P2P) among UK business owners.

 

However, a move earlier this week from The National Association of Commercial Finance Brokers (NACFB), might give the sector a boost.

 

The NACFB lifted restrictions on how many P2P loans brokers can arrange for their clients giving them the green light to promote this burgeoning industry.

 

Under the terms of the trade body’s membership, brokers must have professional indemnity insurance which covers them against claims of mis-selling from clients. And insurance companies had set caps on how much business commercial finance brokers could place with P2P lenders for their cover to stay valid.

 

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 “Peer-to-peer lenders came onto the market at the same time as payday lenders, and some insurers had confused the two,” said NACFB’s chief executive Paul Goodman.

 

“There was a perception that P2P lenders placed onerous terms and conditions on how the loans should be repaid, and that this would make commercial finance brokers vulnerable
to charges of mis-selling.

 

“This left commercial finance brokers having to choose between growing with this booming part of the market and the security of legal and financial backing if they were to face legal action from a client.”

 

“P2P lending is booming and it’s fantastic that our members can now use it as much as they like, safe in the knowledge that they enjoy protection arranged by NACFB Insurance Services,” said Goodman.

 

P2P lending has the potential to radically change the structure of the loan segment of the financial industry and wider awareness of it will lead to a more efficient loan marketplace. According to AltFi Data the cumulative origination volumes for the alternative lending platforms currently stands at £8.7b.

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