ASIC issues guidance on peer to peers

29 March 2016
ASIC has released guidance to help providers of marketplace (also known as ‘peertopeer’) lending products understand their legal obligations.

Marketplace lending (often known as P2P lending) matches people who have money to invest with people who are looking for a loan. These arrangements commonly involve the use of an online platform, such as a website. Whilst P2P lending has been avialable in Autsralia for several years, the entry of a number of new players over the past 12 months has prompted ASIC to release guidance to help providers of marketplace lending products.

ASIC Commissioner John Price said ‘We want to help innovative startups understand the regulatory framework they are operating under.’

‘Marketplace lending is a new innovative product and this information sheet is an example of how ASIC’s innovation hub is helping innovative businesses understand their regulatory obligations to support them to grow and develop in Australia,’ he said.

Fintech the new white hope

The federal government has proved itself a strong supporter if the fintech industry (which encomapsses P2P platforms). In late March it released a Fintech Statement, recognising that financial technology, or FinTech, is transforming our financial system and our economy.

At the launch of the Statement, Federal Treasurer, Scott Morrison, made the following comments:

“We have seen firsthand how FinTech can stimulate technological innovation from crowd funding and mobile payments to digital currencies and robo advisers.”

“With our FinTech statement the Turnbull Government is saying loudly and clearly to the industry that we back you, and we are going to back you in to this transition. The government wants to help create an environment for Australia’s FinTech sector to be internationally competitive, to become a locus of creative thinking and business activity and we want to see the broader local economy energised by attracting and keeping talented entrepreneurs. We want to see FinTech succeed because we recognise the important role the sector plays for economic growth, to drive productivity in this country.

“Financial services is the largest single contributor to Australian GDP. It is therefore critical that we do all we can to have a financial sector that is modern and strong. A strong financial sector contributes to a strong economy. Every sector in the Australian economy relies on a strong financial sector for access to capital and access to banking services. A financial sector that is dynamic, transparent, fast, provides the economic backbone and economic infrastructure that Australian businesses and individuals rely upon.”

Legislation must catch up

The tech world moves at a much faster pace than the legal world, and Fintech is no exception. ASIC’s Information Sheet 213 – Providers of Marketplace Lending Products covers the following areas:

  • What is marketplace lending?
  • ?Key risks involved in providing marketplace lending products
  • ?Key obligations that may apply to marketplace lending business models and applications for relief
  • ?Advertising of marketplace lending products
  • ?Good practice examples

“Adopting some of these good practices can help investors understand the product and risks and build community trust and confidence in marketplace lending more generally,” ASIC’s Commissioner Price said.

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