P2PFA reassures industry after £15m scandal
By Alex LynnThe Peer-to-Peer Finance Association has defended its members stating that they adopted the highest transparency standards, following a major scandal resulting in the resignation of Lending Club\'s CEO
Renaud Laplanche quit online marketplace Lending Club on 6th May after an internal sales review revealed that approximately £15m in near-prime loans was lent to a single investor, contravening instructions as to a non-credit and non-pricing element.
In a statement, the P2PFA said: “[Our] platforms adopt the highest standards in terms of control and transparency, and the United Kingdom was the first country to impose regulation specifically designed for peer-to-peer lending business models, requiring Financial Conduct Authority (FCA) authorisation in order to operate.
“P2PFA platforms publish their full loan books and provide clear information on all fees and charges to both investors and borrowers, demonstrating a level of transparency unrivalled elsewhere in the financial services market.”
Despite the breach of regulations, the P2PFA implied a similar scandal is unlikely to happen in the UK.
It said: “The P2PFA requires robust adherence to its operating principles to instil confidence that the keener prices and better customer service, which have driven growth in peer-to-peer lending in the UK, are based on high levels of business conduct that supplement the requirements of the FCA as the regulator of the sector.”
The San Francisco-based Lending Club also attempted to reassure clients.
Hans Morris, Executive Chairman of Lending Club, said: "A key principle of the company is maintaining the highest levels of trust with borrowers, investors, regulators, stockholders and employees.
“While the financial impact of this [£15m] in loan sales was minor, a violation of the company's business practices along with a lack of full disclosure during the review was unacceptable to the board.
“Accordingly, the board took swift and decisive action, and authorized additional remedial steps to rectify these issues.”
Lending Club’s board has replaced Renaud with company President Scott Sanborn, who will be supported by Hans Morris.
"We have every confidence that Scott and the management team are well positioned to lead Lending Club forward," Morris added.
The firm recently announced an 87% year-on-year increase in operating revenue, while pre-tax earnings also grew 137%.
Keywords: Bridging Finance, Commercial Finance, Bridging Lender, Commercial Lender, Alternative Finance, Broker news, Bridging loans, P2PFA, Lending Club, Renaud Laplanche, Hans Morris, Scott Sanborn