ASIC released a report today on its first survey of various participants in the marketplace lending industry and our broader activities relating to marketplace lending.
Marketplace lending allows investors to invest in loans to consumers and small and medium enterprises (SMEs). It has the potential to provide another avenue of funding for business and consumers.
ASIC conducted the survey on a voluntary basis between November and December 2016 and focused on marketplace lending providers' business models and activities for the financial year ended 30 June 2016.
Commissioner John Price said, 'As a relatively new industry, it is important for ASIC to engage with and better understand the business models of marketplace lending providers.
'The survey responses have provided valuable insights into these businesses. We acknowledge and appreciate the participation of survey respondents', he said.
Report 526 Survey of marketplace lending operators (REP 526) summarises ASIC's findings from the 2016 Marketplace Lending Industry Survey and outlines ASIC's role and recent activities in regulating the sector.
The responses to the survey showed that during the 2016 financial year, $156 million in loans were written to consumers and SMEs. Respondents reported a total of 3,201 investors and 7,448 borrowers as at 30 June 2016. Provider revenue was predominately tied to loan origination, and respondents were aware of the conflicts that arose as a result. The number of complaints received by providers was generally low at this stage.
Since the commencement of ASIC's Innovation Hub in March 2015, ASIC has engaged with 34 marketplace lending providers to assist them to better understand the requirements under Australia's regulatory framework. This has included specific regulatory guidance and examples of good practice.
ASIC has also granted waivers of some obligations under the law to facilitate six marketplace lending business operations, while maintainingappropriate investor protections.
ASIC will continue to monitor developments in the marketplace lending sector. ASIC is keen to assist marketplace lending providers and engage with new fintech businesses and industry organisations through its Innovation Hub.
In Australia, there is no bespoke regulatory regime for marketplace lending. The regulations that apply to marketplace lending depend on how the business is structured, what financial services and products are being offered and the types of investors and borrowers involved.
In most cases, ASIC has identified that the provision of marketplace lending products involves the operation of a managed investment scheme, which would require the marketplace lending provider to hold an Australian financial services licence. Where the loans made through the platform are consumer loans (i.e. loans to individuals for domestic, personal or household purposes), an Australian credit licence is alsorequired.