Aussie P2P Lender Calls for more Regulation

By Henry Thomas on Tuesday 7 July 2015

Alternative Lending

Stuart Stoyan, founder of the P2P lender MoneyPlace, has drawn attention for his opinion on regulation after claiming “there’s not enough of it”.

The Australian reported the remark at a recent disruptors’ conference, in which he told his Financial Services Institute of Australia (FINSIA) audience that:

Our biggest fear is a major failure by a P2P lender, or a company claiming to be one, that causes ASIC or another agency to come in and say: ‘we’re shutting this down’.”

The claim is perhaps a little surprising, given that MoneyPlace is not yet functional. The platform is still in the process of raising $2-2.5 million and, following this, they will need to secure an Australian Financial Services License. MoneyPlace is aiming to have this completed by August. However, with Mr. Stoyan’s background – he spent three years at National Australia Bank – he is well placed to discuss the integrity of the industry. Mr. Stoyan continued:

As other people see the opportunity you might start to get less refutable players, like in the payday lending industry.

Recent weeks have seen much reporting from AltFi on the expansion of the Australian alternative finance industry: in April we reported on OnDeck’s expansion into the Australian market, in June it was Spotcap’s turn to enter the market and last week we discussed ThinCats Australia’s plan to stage an IPO. This was part of the plan from ThinCats’ CEO – Sunil Aranha – “to capture a relevant share of an estimated $12-15 billion market”.

Mr. Stoyan’s view creates an interesting contrast to what many view as one of alternative finance’s most appealing qualities – the ease of doing business thanks to its low level of regulation. Chris Maule, writing for AltFi, voiced a similar desire for increased regulation – this time in the UK space – due to the benefits to transparency. Their arguments seem valid – many have questioned alternative finance’s ability to survive in the event of an economic downturn. Stronger regulation should ensure that lending platforms are able to weather the storm to a far greater degree than without. A look at the Chinese market may create cause for concern. The under-regulated market is home to roughly 1,000 active platforms, of which 58 closed down in the last quarter of 2014 – amid complaints of poor regulatory oversight.

The continued buoyant growth of the P2P market will increase debate over the need for greater regulation. Greater regulation may not hinder growth, and should make the industry more sustainable in the long run.

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