First major peer-to-peer lender gains FCA authorisation

Financial services firm Zopa has been granted full authorisation by the Financial Conduct Authority (FCA) for peer-to-peer lending, the company announced last week. The decision comes almost two years after it applied in 2015.

Zopa is the first of the UK’s ‘Big 3’ peer-to-peer lenders to gain full authorisation from the FCA, Business Insider reported.

Welcoming the news, Giles Andrews, co-founder and chairman of Zopa, said: “Zopa, both individually and as a founder member of the Peer-to-Peer Finance Association (P2PFA), has campaigned for peer-to-peer lending to be a regulated activity for a number of years. We are delighted to receive our full FCA authorisation.”

Full authorisation from the FCA allows Zopa to offer the new Innovative Finance ISA (IFISA) and the company said that it plans to seek permission from HMRC to become an ISA manager.

According to consumer group Which?, Zopa said previously that its IFISA would offer the same rates as its existing products — currently between 2.9% and 6.1% a year, depending on the length of the term.

Zopa also revealed last year that it plans to launch its own bank. Jaidev Janardana, Zopa’s CEO, said last week that the company is “working towards applying for a banking licence”.

Peer-to-peer lending companies match up investors and borrowers directly through an online platform, essentially cutting out the middle man.

Figures published by the P2PFA last month showed a continued increase in lending volumes and investor participation in the first three months of 2017.

Cumulative levels of lending reached almost £8.5bn, with P2PFA platforms facilitating the origination of over £1bn in January-March. More than 180,000 investors were participating at the end of the period as well as 420,095 borrowers.

Robert Pettigrew, director of the P2PFA, commented: “The growth in peer-to-peer lending volumes over the last three months highlights the success which platforms have secured in the market — delivering a permanent shift in the financial services landscape, and providing an attractive offering for investors and borrowers.”

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