regulation

Fundedbyme is now a recognized p2p lending operator in Malaysia

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Scandinavia’s equity crowdfunding platform, Fundedbyme, today received recognition as one of six operators  for Peer-to-Peer crowdfunding by the Malaysian Securities Commission in the Asian region. This announcement positions Fundedbyme as the only European operator in the Asian region. The award was awarded to Fundedbyme Malaysia at the third annual SCxSC Digital Finance hosted by the Securities Commission Malaysia. Malaysian Minister of Finance, Najib Razak and SC chairman Ranjit Ajit Singh handed over the award to Fundedbyme Malaysia’s COO, Angelld Quah, and CEO Daniel Geottfert.

fundedbyme-malaysiaThe Asian region is seeing an explosion in peer-to-peer activity, particularly, and crowdfunding in general,” says Daniel Daboczy, CEO and co-founder of Fundedbyme. “Fundedbyme is strategically positioned as the bridge between Scandinavia and Asia as we early-on saw the trend of cross-border investments – in the first equity crowdfunding campaign from Malaysia,
Halal Speed Dating, we saw that 40% of investors came from Europe, which is very exciting for both Asian and European entrepreneurs,” Daboczy continues. The latest equity crowdfunding campaign from Malaysia currently on the platform, iTalent, has registered interest to join from investors in 73 different countries.

Photo: Malaysian Minister of Finance, Najib Razak and Second Finance Minister Johari Abdul Ghani handing over the award to Fundedbyme Malaysia’s COO, Angelld Quah (Source: Fundedbyme)

The Regulatory Framework for P2P Lending Industry in Thailand : A Consultation Paper issued by the Bank of Thailand

Guest

This is a guest post by Pawee Jenweeranon, a graduate school student of the program for leading graduate schools – cross border legal institution design, Nagoya University, Japan. Pawee is a former legal officer of the Supreme Court of Thailand. His research interests include internet finance and patent law in the IT industry.

1. Introduction : The Peer-to-peer Lending Industry in Thailand

Peer-to-peer lending which also known as social lending or crowd lending has drastically increased in the recent years in many countries over the world. The volume of peer-to-peer lending activities also has been grown rapidly, for instance, the volume of peer-to-peer lending activities in U.K. has doubled every year in the last four years.

Peer-to-peer lending might be used in many ways if it is properly regulated by the responsible authorities, this is one of the reasons which lead to the issuance of the consultation paper to regulate peer-to-peer lending industry by the Bank of Thailand.

For instance, due to the current situation, poor people and SMEs in Thailand normally face difficulties in accessing finance from banks or traditional financial institutions[i]. This affects the increasing number of informal loans outside the financial institution system which are normally illegal, specifically; the problem of informal loans currently stood at more than 5 trillion baht and covered around 8 million households in Thailand[ii]. Continue reading →

Lending Works Gets Full FCA Authorisation

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Lending Works announced that they received full authorisation by the FCA. It is the first P2PFA member to receive that status. Lending Works plans to launch their IF ISA offer in January 2017. Some smaller new entrants already had full authorisation, while the main players still operate on interim permission awaiting approval.

Lending Works writes:

We’re fully authorised by the FCA

We are thrilled to announce that we’ve today received official confirmation from the Financial Conduct Authority (FCA) of our full authorisation as a financial services provider. This is a momentous occasion for Lending Works, and also means we are the first of the peer-to-peer lending platforms operating under interim permission to receive this approval.

It marks the end of a thorough, 12-month review in which our processes, systems, policies, financials and levels of compliance and risk management have undergone intense scrutiny from the UK’s primary financial services regulator, and this green light from the FCA represents the ultimate stamp of approval. We hope that this news will further underscore your confidence in us, and all that we stand for.

Our ISA is coming soon

With this FCA approval in hand, it now paves the way for us to apply to become an ISA Manager with HM Revenue & Customs. Once this formality is complete, we’ll be eligible to deliver the Lending Works Individual Savings Account (ISA), a product we plan to launch in January. We are waiting until January to launch our ISA for a number of reasons, namely: the expected waiting period for obtaining ISA Manager approval, the fact that we have other major releases planned for the next couple of months, avoiding launching before or during the Christmas break, and to align the launch with the January-to-April ‘ISA season’.

New branding, website and user dashboard

In a few weeks’ time, we will launch new branding that we hope is befitting of our position as an innovative financial services technology firm. In addition, we will launch an easy to navigate, simple-yet-informative new website and intuitive new user dashboard. We will introduce you to the new brand, website, logo and lender dashboard closer to the time of launch, but we are confident it will further enhance your customer experience.

Partnerships

Finally, we have also got several new major partnerships going live soon too. These partnerships will bring more and more high-quality borrowers to our platform, which in turn will benefit you, our lenders.

But for now, we hope you will share in our delight at having made this significant step up with the FCA – a launchpad we believe will drive us towards even bigger and better things. …

Regulatory Development of Peer-to-Peer Lending in Taiwan

Guest

This is a guest post by Hungyi Chen, Ph.D. candidate at the Graduate School of Law, Nagoya University. He is researching alternative finance in East Asia.

1. Relevant Background

Internet finance, including (1) online stored payment by non-bank, (2) crowdfunding and (3) peer-to-peer lending becomes hotly debated issues in Taiwan recently. To boost the development of financial innovation, the regulation of online stored payments by non-banks was already implemented on January 2015 after discussions and debates between financial authority and platforms. Besides, a regulatory framework for equity-based crowdfunding has also been enacted in the end of April 2015 and amended in the early of January 2016.

In order to encourage and accelerate the development of fintech industry in Taiwan, the financial authority, Financial Supervisory Commission (FSC) of Taiwan, has published Fintech Development Strategy White Paper on May 2016[i]. One of main goals is evaluating the possibility of introducing the mechanism of P2P lending into Taiwan’s capital market and providing a regime for regulating this industry.

Some business models of P2P lending are forbidden due to conflict with The Banking Act[ii] in Taiwan. Recently, it is considered to be introduced in Taiwan and evaluated by the recently established project team of the financial authority in Taiwan, Financial Supervisory Commission (FSC)[iii]. Despite the fact that the attitude toward P2P lending industry of financial authority in Taiwan is still vague, as of July 2016 there are three P2P lending platforms already providing their services in Taiwan, including Lend & Borrow[iv], Wow88[v], XiangMinDai[vi]. They have tried to design their business model to avoid potential legal risks. For better understanding of the P2P lending industry, this article tries to provide a brief regulatory overview of Taiwan in following part.

2. Regulatory Overview of P2P lending

Currently, there is no any specific regulation toward this industry in Taiwan. Recent official document[vii], indicate that the business model of P2P lending in Taiwan should avoid to involve in any activities of accumulating capital from general public or issuing any securities. XiangMinDai, a P2P lending platform in Taiwan, has analyzed by FSC of Taiwan. The former chairman of FSC of Taiwan, Ms. Wang, has stated that ‘…the business model of XiangMinDai is majorly providing services of debt transaction, which does not involve in activities of depositing or charging fund. Accordingly, it is not the regulatory scope of FSC at this moment…[viii]‘

Although there is no any financial regulation of P2P lending in Taiwan, Banking Bureau of FSC has issued a statement[ix] on April 14, 2016, pointing out some legal compliance issues for P2P lending platforms, including (1) platforms should not involve in issuing any securities, (2) ensure privacy of customers, (3) activities of deposit and store-value business without licenses are forbidden, (4) illegal ways of debt-collection is forbidden.

Taiwan Figure 1

Within 2 weeks, Banking Bureau of FSC, announced another statement[x] for supplement, indicating that (1) the interest rates of the case on the P2P lending platform is 30.15%, which may be illegal according to Criminal Act in Taiwan[xi], (2) legal concern of breaking the law of Multi-Level Marketing Supervision Act[xii] and Fair Trade Act[xiii]. Continue reading →

Development and Regulation of P2P Lending and Equity-based Crowdfunding in Hongkong

Guest

This is a guest post by Hungyi Chen, Ph.D. candidate at the Graduate School of Law, Nagoya University. He is researching alternative finance in East Asia.

1. The recent development of online alternative finance

Given the recent trend that Fintech is rapidly growing in the world, in order to maintain the role of international financial center, the financial authority of Hong Kong has been aware of issues relating to Fintech industry[1]. On November 13th, 2015, Stored Value Facilities Payment Systems, such as online stored payment business as PayPal, is allowed to operate by non-bank[2]. This is a milestone for Hong Kong including non-bank of operating business highly relevant to conventional bank.

In order to enhance the development of startups in Hong Kong, financial technologies (Fintech) are emphasized by the authority since the investment of Fintech is a target of many venture capitalists[3]. Nevertheless, compared with other jurisdictions in Asian countries, which already lightened entry requirement to encourage non-bank for engaging business of equity-based crowdfunding, such as Japan, Korea, Malaysia, Taiwan, and Thailand, the entry requirement of Fintech, especially alternative finance may be stricter in Hong Kong.

Until now, there is still no equity-based crowdfunding platform established in Hong Kong. However, the huge demand from capital market gradually leads the development of crowdfunding in Hong Kong, especially debt-based crowdfunding, which is also known as Peer-to-Peer Lending. Currently, there are 4 major peer-to-peer lending platforms, including BestLend, GoLend, Monexo, and WeLend.

2. Relevant industry background

With unique selling factors, the peer-to-peer lending platforms may have a rapid growth in the near future. On one hand, from viewpoints of investors, the deposit rates of savings are from 0%~0.001%[4]. Even the deposit rates of fixed deposit of 12 months are from 0.15%~0.2%[5]. Additionally, inflation rates are around 4% continuously in 2013 and 2014[6], which means the real interest rate may be negative in Hong Kong. Accordingly, there are strong incentives for investors to vitalize their capital.

On the other hand, from viewpoints of borrowers, there are two fundraising channels for loans, including banks (Licensed Banks, Restricted License Banks, Deposit-taking Companies) and Money Lenders. Since the financial authority restricted the mortgage market of banks to prevent a real-estate bubble, it is difficult for borrowers to get the loan amount they need from banks by mortgage. As a result, they turn to Money Lenders as an alternative opportunity. Although the interest rates of Money Lender are generally higher than banks, compared with banks which normally take 1-6 weeks for examining procedure, the process of Money Lender is more simplified[7]. Continue reading →

Overview of the Regulatory Framework for P2P Lending and Equity-based Crowdfunding in Singapore

Guest

This is a guest post by Pawee Jenweeranon, a graduate school student of the program for leading graduate schools – cross border legal institution design, Nagoya University, Japan. Pawee is a former legal officer of the Supreme Court of Thailand. His research interests include internet finance and patent law in the IT industry.

1. Introduction

In the recent years, it is inevitable that the financial technology or Fintech takes the significant role toward the evolution of financial services industry in this region. In other words, Fintech normally be used to improve the financial industry services.

In 2015, the Monetary Authority of Singapore (hereinafter referred to as “MAS”) has committed two hundred twenty five million Singapore Dollar (around 166 million USD) to support the development of Fintech industry for the startup ecosystem in the upcoming years[1]. This is a good reflection of the significance of the financial technology or Fintech development in Singapore.

From the economic perspective, Small and Medium Enterprises (hereinafter referred to as “SMEs”) are important part of Singapore’s economy. SMEs account for 99 percent of all registered enterprises in Singapore[2]. From this reason, enhancing the competitive capacity of Singapore SMEs is essential for Singapore economy development.  Even almost all of the SMEs in Singapore are supported by the Governmental Enterprise Development Agency and Centers[3], (more than 100,000 SMEs got funding support by the Singapore government[4]); however, internet financial technology was also proposed as an alternative mechanism for enhancing the competitiveness of Singapore SMEs in the recent years[5].

 

2. Regarding Peer to Peer Lending


2.1 Background
Generally, there are many peer to peer lending platforms in Singapore; however, they normally lend money to businesses rather than individuals due to the strict regulation for money lenders. The additional limitation on lending to low-income borrowers[6] who are Singaporean citizens or permanent residents which is another requirement should be considered by the lenders.

In general, money lending in Singapore is mainly regulated by the Moneylenders Act 2010 and the Moneylenders Rules 2009. For the Moneylenders Act 2010, due to the main purpose of this act is to develop consumer protection mechanism to protect borrowers of small amount loans[7], this is the reason why the act provides stringent limitation for moneylenders to operate their business. This is another key different of money lending law of Singapore compared to other countries in Asia such as Hong Kong which focusing more on lending activity[8]. Briefly, the act requires moneylenders to hold the Moneylenders license with obligations and limitations for licensee[9].

In Singapore, even there are strict regulations in the existing law relating to a money lending business; however, there is the legislative effort of the Singapore government to address the issue regarding Securities-based Crowdfunding, which can reflect the understanding of the Singapore government toward the development of Financial Technology (Fintech) and the supporting regulatory framework.[10]

2.2 The Regulatory Framework for Peer to Peer Lending Business

From the document published by the MAS on Lending-based Crowdfunding – Frequently Asked Questions (FAQs)[11], generally, the operation of P2P lending is restricted by MAS under the Securities and Futures Act (Cap. 289) (SFA) and the Financial Advisers Act (Cap. 110) (FFA).

Specifically, the P2P lending business needs to prepare and register a prospectus with MAS in accordance with Section 239(3) of the SFA. In addition, not only the registration of the prospectus but also the P2P lending platform need to follow the licensing requirements, particularly, the P2P lending business which fall within the scope provided by MAS needs to hold a Capital Market Services (CMS) license. Continue reading →