Last night we attended a well put together seminar where the Alternative Funding Network brought together a panel of experts to offer industry insights. With only a couple of weeks to go till the end of 2016, it made sense to take a look back at what the year has brought for the industry. But of course, life is all about moving forwards so they also provided their thoughts on what 2017 could possibly bring.
We’ll cover here just a couple of the highlights of the evening. If you are interested in what else was said, we live tweeted the event! So just head on over to our Twitter page @relendex to have a ‘live’ feed of the event.
Looking Back 2016
FCA
No surprise that the Financial Conduct Authority’s authorisation process served to be the event (or non-event) of the year. It has been a long process with many peer-to-peer lenders on interim permissions (including ourselves) still waiting for full approval. But as the approvals start trickling in, we should expect more authorisations to be made in the coming months.
The FCA published their interim feedback last week highlighting the results of their call for input earlier this year. You can read it in detail here.
IFISA
Hand in hand with the FCA authorisations comes the Innovative Finance ISA. The UK government announced that p2p lending activities would now be eligible for the new tax-free ISA from April 2016. While this has encouraged an influx of retail investors, the number of p2p platforms that offer the IFISA is still very much limited.
Platforms will need to be fully authorised by the FCA prior to applying for ISA manager status from HMRC.
Brexit
Last but not least we have Brexit. The event that shook not only the alternative finance sector, but the whole of UK/Europe. It has led to a slowdown in the financial services industry as the uncertainty envelopes every decision to be made. As we wait with bated breath for March 2017 for a clearer picture of where the UK stands (and by extension the financial sector).
Looking Forwards 2017
Fund Managers
Will 2017 be the year that some p2p platforms get classified as fund managers? For platforms where auto-allocation and diversification happen, they probably hold many similarities to fund managers. Although here at Relendex, we operate with a more traditional p2p model where lenders will need to directly make the choice of where they invest their money into.
Diversity and Specialisation
Interestingly with the rise of fintech has also come the articles/commentary pieces of the death of banking. However the panel agreed that banks will always exist and that fintech is not trying to stamp out the large banking institutions, but instead taking components of banks and making it more efficient.
Standardised Offerings / Comparison
As the industry grows with time, platforms should evolve the way their offerings are presented to the customers to allow for easier comparisons. As mentioned in the FCA’s interim feedback, a ‘mortgage-lending standards’ should start to emerge. Similar to the credit card industry and how they started to advertise their Annual Percentage Rates (APR) that would allow consumers a simpler way to compare products between companies.
As a whole the panel were positive in the direction the alternative finance industry is heading towards. 2017 is certainly going to be an interesting time as many companies are venturing into ‘unchartered territory' as they seek to challenge the status quo while maintaining the best interests of the consumers.
