Speaking at the P2PFA Summit at LendIt Europe today, Harriet Baldwin said that the industry needs to ensure that regulation doesn’t act as a barrier to innovation.
She added that FCA is also working with the the Prudential Regulation Authority to identify how technology can help deliver regulatory requirements.
Harriet Baldwin said:
"We want to harness the power of technology in financial services. Not only does it make the customer’s lives easier – but tech companies innovate; they create opportunities, jobs and growth; they expand the economy.
"We believe that Peer to Peer lending is a brilliantly innovative new form of finance – which we want to see continue to grow and evolve.
"So many of our small businesses tell us about the difficulty of accessing finance. Peer-to-peer lending can plug that gap. I am proud of the fact that the UK has the largest P2P and alternative finance sector in Europe."
As part of the savings package announced in the March 2015 Budget, the government announced plans to expand the range of products that can be held in stocks and shares ISAs to include loans made through P2P platforms.
Holding P2P loans within an ISA will mean that interest received on the loans will not be subject to tax. The rules will come into force from the start of the next tax year, on 6 April 2016.
From earlier this year, investors in P2P platforms have been allowed to offset any losses from P2P loans which go bad against other P2P income, reducing the amount of income tax that the individual has to pay on the P2P interest.
Harriet Baldwin added:
"The objective here is to level the playing field, and make P2P more attractive to investors by equalising the advantage banks and other investment products have over them.
"We have also been consulting with industry on the implementation of new withholding tax obligations, to apply across all P2P lending platforms from April 2017.
"I appreciate the engagement this sector has had with the Government on this issue, and we will be publishing our response soon – watch this space."
