regulation

Latvia: Mintos in Disagreement with Consumer Right Protection Centre over Interpretation of Regulation

wiseclerk 1 Comment

Recently launched p2p lending marketplace Mintos is in disagreement with a consumer right protection body of the government over the interpretation of rules regulating lending to consumers and whether Mintos is conducting business within these rules or not.

Two statements were published on the internet (here and here) last Friday that state, that while Mintos has the necessary license to lend to consumers, it failed to mention during the application that it would receive deposits from third party investors and make assignment of loan parts to these investors, for which in the view of the PTAC it lacks the necessary license. In the statement the body asks Mintos to cease continuing with this practise.

P2P-Banking.com contacted Mintos CEO Mārtiņš Å ulte on Friday evening and received this comment by him: ‘To put it shortly Consumer Right Protection Centre (CRPC) has asked us to provide additional information on how peer-to-peer process works at Mintos. Before launching Mintos we did an in-depth legal due diligence and we are confident that we are working in accordance with all aplicable regulations.
The peer-to-peer (or better, marketplace) lending is still nascent industry and regulators in general around Europe are still debating on how to best respond to it. As forerunner of peer-to-peer lending in Latvia we have already had discussions with regulators and will continue to engage with them and help with information where necessary. We will hold an official press conference on Monday to encourage further discussion.‘ Continue reading →

German Crowdfunding Platform Bergfürst is a Bank Now

wiseclerk

German crowdinvestment service Bergfürst announced yesterday that it has been granted a full bank license from German regulator Bafin. This status is not that frequently reached by new companies. In 2013 only 3 new companies were granted full bank licenses.

Bergfürst was launched in 2012 and featured a fully regulated exchange as USP from the start allowing investors to trade equity of funded companies with daily market prices fixed. Effectively Bergfürst allows companies to do a small IPO directly to the crowd. Since launch Bergfürst only did one funding – albeit a huge one – in the end of 2013, Urbanara raised 3 million Euro (about 4M US$). In September 2013 Volksbank Berlin became a shareholder of Bergfürst. Continue reading →

P2P lending service Bondora is now authorised and regulated by the UK Financial Conduct Authority

wiseclerk

Bondora is now authorised and regulated by the UK based Financial Conduct Authority (FCA). The FCA supervised peer-to-peer lending license is the only regime available anywhere in Europe that subjects peer lenders under regulatory oversight, supervising peer lending companies. Bondora is one of the selected few peer lenders who is now operating under a license and probably the first non-UK p2p lending company licensed by FCA.

“The authorisation and regulation are good news for our customers across Europe,” commented the CEO of Bondora, Pärtel Tomberg and added that customers will greatly benefit from the supervision of the FCA as well as the additional requirements Bondora needs to comply with in order to maintain the authorisation. “We are likely the only peer lender outside of UK who obtained this authorisation and this type of regulation is something that we have been looking forward for a number of years,” added Tomberg.

The interim licence increases the strength of the company by making sure that Bondora complies with the rules set by the regulator. These regulations will ensure that Bondora and other regulated peer to peer lenders provide a more secure, transparent and sustainable service to its customers. These provisions include among others conduct of business rules (in particular, around disclosure and promotions), minimum capital requirements, client money protection rules, dispute resolution rules and a requirement for Bondora to take reasonable steps to ensure existing loans continue to be administered if the firm goes out of business. Bondora already complies with most of the regulations however there is a transitional period during which all processes need to be made compliant with the standards required.

Until now Bondora, as well as most other peer lenders, operated without a specific license and regulation since a suitable regulatory regime did simply not exist. The UK based Financial Conduct Authority started issuing specific peer licences from April 2014.

Bondora is the meeting place that unites investors and borrowers from all corners of the world. Bondora provides easy access to two mutually beneficial solutions: borrowers find the best available financing with affordable monthly payments, while investors generate profit on loan interest. The company serves more than 90 000 Customers from 29 different countries and has issued over 16 million EUR in loans and its users have earned more than 1.6 million EUR in interest income. Continue reading →

Why Friendsclear Closed

wiseclerk

Friendsclear, a french p2p lending service, has been operating for more than 3 years. When I learned in the end of May that the company is closing down, I contacted the founders to find out why. Nicolas Guillaume, co-founder of Friendsclear, told P2P-Banking.com:

The key points are the following:
– We have been in a quiet period following french regulator’s remarks for about 8 month (april to dec 2012) and we relaunched our platform in a new model compliant with regulator’s remarks in december 2012
– Regulator’s remarks were mainly on a better risk management for client and the capacity for the bank to refuse any loan without explication (“discretionary”)
– We modified our crowdfunding model with a project mitigation model and a guarantee in capital by our banking partner (Credit Agricole)
– We had a very progressive and slow restart due to extended legal process with our banking partner (regulator’s remarks made them very meticulous)
– We considered regulator’s remarks as non legaly based  but our banking partner was not ready to discuss with the regulator.
– French regulator has published a guide for crowdfunding not friendly with crowdfunding platform and has received complaints about (money collect need a emoney licence, equity need an extensive broker licence,…)
Regulation is planned to be changed in September 2013
– With capital guarantee by our banking partner we had 2 selection processes, one by internauts and the other through traditional banking process. Theses 2 processes were divergent in criteria, timing and objectives and resulted in a very weak pipe channel.
– Althought diagnostic was clear, we took time to give up and convince all our stackholders and partner to stop.
For more details I recommend Nicolas’ blog post (original in french; english by Google translate)

Short News: Smava, Fidor, P2P Equity, SEIS, This is Money

wiseclerk

German laws require a banking license to hand out loans. To comply with regulation the two active German p2p lending services partner with a transaction bank, which originates funded loans and then sells the debt claim to the individuals (‘lenders’) that did bid on the loan request on the p2p lending marketplace.
Smava now switched it’s bank partner. Since Smava’s launch in 2007 the bank partner was the biw Bank für Investments und Wertpapiere AG. For all new loans after Dec. 1st, Smava cooperates with the Fidor Bank AG (see earlier coverage on Fidor). Smava feels that Fidor is a great match and praises the integration advantage Fidor offers with its web APIs. The change does not bring any immediate benefits for lenders other than a) unlend money will now earn 0.5% interest p.a. and b) the e-money license of Fidor allows lenders to start lending without verifying identity first – but that’s rather symbolic as it applies only to amounts of up to 500 Euro (and the minimum bid on Smava is 250 Euro) meaning that new lenders could test Smava with up to 2 bids before going through postal identification process.

P2P Equity

Smarchive, the fourth startup pitching at German marketplace Seedmatch (see earlier coverage on Seedmatch) raised 100,000 Euro in less than 3 days. The pitch originally was for 50K, but was oversubscribed to the maximum possible amount (100K).

Seed Enterprise Investment Scheme (SEIS)

In the UK the market the surrounding conditions for the emerging p2p equity market get better and better. From April 2012 investors in eligible startups will be able to claim 50 percent income tax relief (on a maximum investment of 100,000 GBP per year). The minimum required investment is just 500 GBP per startup. The new law will replace the Enterprise Investment Scheme (EIS) which currently already offers a generous 30% tax break. The British government will also ease some of the restrictions of the current EIS scheme.
The SEIS will bring a huge boost to p2p equity marketplaces in the UK.
Maybe an idea to be copied in other legislations to foster startup foundation?

ThisisMoney on P2P Lending Risiks and Quakle

ThisisMoney has two (1,2) long articles on the failure of Quakle and risks associated for lenders with p2p lending in general. While not wrong, the articles oversimplify some things. And actually there are more risks for lenders then the two mentioned (compare my old article ‘For Debate: A Flaw in Current P2P Lending Models?‘). The author is a strong advocate of the P2P Finance Association: ‘Checking for the association membership is crucial. It’s a self-governing industry body, so does not carry the same weight as regulation by the Financial Services Authority – something the industry wants but lacks as yet – and is currently the best benchmark for those considering lending.‘. Not a bad advice, but with the association and the market so young, I see that as a bit of limiting, possibly excluding any new entrants that might launch.

Pretdunion Gains Banking License And Raises Funding

wiseclerk

It is a successful autumn for French p2p lending service Prêt d’Union. After two years of work, Prêt d’Union was granted a banking license by the French authority. Prêt d’Union also raised a second financing round for 3.8 million Euro (approx. 5.2 million US$) from Crédit Mutuel Arkea and Kimaventures and others. The total funding raised is now 4.8 million Euro.

“The funds raised are for marketing, software development and operating costs. Note that we have dedicated 2.2 million Euro for the approval of the Bank of France to be recognized as an institution credit, such as Cetelem or Sofinco, “said Charles Egly, CEO of Prêt d’Union (statement originally in French, translated).

See a video interview with founder Charles Egly on Frenchweb.

Offering p2p loans for 36, 48 and 60 month loan terms the company aims to reach a 0.1% market share of  the consumer credit market in France.

Update: Lending on Prêt d’Union is restricted to lenders that have ‘accredited investor’ status (this excludes the majority of population).