Zopa, Fundingcircle and Ratesetter announced the launch of the ‘Peer2Peer Finance Association‘.

The members say that the new UK trade body is set up primarily to ensure the growing sector maintains high minimum standards of protection for consumers and small business customers, as it brings much-needed new competition and innovation to the banking market. In Britain this year, peer-to-peer finance will account for more than £100 million of loans to individuals and small businesses. As new financial regulatory structures are put in place by the Government over the next 18 months or more, the Peer-to-Peer Finance Association will also work hard to ensure that the new rules will include effective regulation for the peer-to-peer finance market.

The association is open to other peer-to-peer providers subject to meeting the required standards.
The Association has established a wide definition of peer-to-peer finance providers as:
‘platforms that facilitate funding via direct, one-to-one contracts between a single recipient and multiple providers of funds, where the majority of providers and borrowers are consumers or small businesses. Generally, funding is in the form of a simple loan, but other instruments may evolve over time.’

The Association’s Rules and Operating Principles set out the key requirements for the transparent, fair, robust and orderly operation of peer-to-peer finance platforms and cover:
1. Senior management systems and controls;
2. Minimum capital requirements;
3. Segregation of participants’ funds;
4. Clear rules governing use of the platform, consistent with these Operating Principles;
5. Marketing and customer communications that are clear, fair and not misleading;
6. Secure and reliable IT systems;
7. Fair complaints handling; and
8. The orderly administration of contracts in the event a platform ceases to operate.

Rhydian Lewis, CEO of RateSetter, said: “The message we want to send to the wider world is that Peer to Peer is working: Lenders across a number of sites are getting market beating returns on their savings, Borrowers are getting lower cost loans, and increasingly P2P finance is becoming more established in the mainstream. As an industry, we would all encourage clearer regulation of P2P finance (not least because it would address the perception that P2P is somehow not regulated). The Association will give us a platform with which to lobby for P2P to be considered on an equal footing with other financial services.”

This is the first formal trade organisation of p2p lending services. In the US several companies including Prosper and Lending Club did combine efforts to lobby for congress to ease regulation on p2p lending. Users on the other side, united in the PIVN in the Netherlands.