But Funding Circle is facing increased competition in the peer-to-peer as well as broader lending space. Services such as the U.K.’s Funding Tree, or crowdfunding services like Seedrs pose competition to Funding Circle, while it also comes up against other rivals like Zopa.
The market is set for continued growth of around 53 percent per year between 2016 and 2020, according to analysis firm Research and Markets, but the industry hasn’t had a smooth path. U.S. peer-to-peer firm Lending Club was plunged into crisis last year after an internal review found issues with the company’s lending practices which led to the firing of CEO and founder Renaud Laplanche.
U.K. watchdog the Financial Conduct Authority (FCA) said in December that there is “evidence of potential investor detriment” in the peer-to-peer lending industry and that it proposes “strengthening rules in this area”. Some of the issues the FCA flagged up included promotions for websites that did not meet the requirement to be “clear, fair and not misleading”, difficulty of comparing different platforms, and business practices that are not up to the right standard.
Meekings said he does not worry about this being a headwind for Funding Circle as it’s already adhering to all of the FCA’s proposals, but the entire industry could benefit from stricter rules.
“We 100 percent believe what the FCA came out with. People lend money through our platform so it’s only right they understand the risk and they see the return they are earning,” Meekings told CNBC.
“In the current regulation there is no stipulation of what data platforms need to show to investors to make sure they need to understand the risk or return on loans which is bizarre given it’s an investment product. It’s something we have done but some smaller platforms don’t do it.”
Source : CNBC