The Australian Securities and Investments Commission (ASIC) has released a report into its second survey of the marketplace lending industry, which has shown steady growth in both borrowing and lending activity in Australia across these platforms.
Marketplace lending allows investment in loans to consumers and small and medium enterprises (SMEs) and can provide an additional avenue of funding for business and consumers.
The survey covers marketplace lending activities that are regulated by ASIC. During the 2016–2017 financial year the marketplace lending industry continued to grow with survey results identifying $300 million in loans written to consumers and SMEs, nearly double the figure for 2015–16. Respondents reported a total of 7768 investors and 18,746 borrowers as at 30 June 2017, which is more than double the figure for 2015–16.
ASIC Commissioner John Price said that the results of the second survey show that marketplace lending is continuing to grow and mature as an industry. 'This survey helps ASIC to better understand and regulate these businesses, and to identify areas to monitor in future. We are very appreciative of the participation of survey respondents', he said.
As with the 2015–16 survey, the provider revenue was predominately tied to loan origination, paid by borrowers. There was a moderate rise of 1.6% in overall default rates, to 2.2%. The number of complaints received by providers remains generally low at this stage, however, there was an increase in reported breaches and instances of fraud and cyber incidents.
ASIC conducted the survey between August and September 2017 and focused on marketplace lending providers that provide financial products or services. The survey relates to the participants' business activities for the financial year ending 30 June 2017.
Report 559 Survey of marketplace lending operators (REP 559) summarises ASIC's findings from the 2017 Marketplace Lending Industry Survey.
Background
In Australia, marketplace lending does not have a stand-alone regulatory regime. 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 also required.