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Peer-to-peer (P2P) lending platform Folk2Folk has obtained a full license from the UK Financial Conduct Authority (FCA), the company said last week.
Under the UK regulation, a number of crowdfunding service providers operate under an Appointed Representative temporary authorization prior to receiving full license.
Now that it is fully authorized, the platform will seek regulatory approval to offer Innovative Finance ISA (IFISA), a program for tax-free P2P lending, to customers in due course, the company said.
“[The FCA’s] decision is significant as it makes us eligible to offer our IFISA before the end of this tax year,” said Folk2Folk CEO Jane Dumeresque. “I think it speaks volumes about Folk2Folk as a business having gained its full FCA authorisation ahead of many of the industry’s leading and larger platforms. We believe this will act as a positive sign to investors as well as business professionals that are looking to partner with a trusted and fully authorised platform like Folk2Folk,” she added.
In addition, Folk2Folk expects the full authorization to be accepted as accreditation from UK businesses, such as lawyers, accountants and bankers, and that they will be encouraged to partner the platform and assist investors with alternative forms of finance and investment options.
The UK crowdfunding market falls under the scope of the FCA since April 2014. P2P lending platforms Lending Works and LendingCrowd also received full authorization in the UK earlier this year. To see some of the leading UK market participants click here.
As of 6 April this year, the IFISA allows UK investors to lend money using FCA-regulated crowdfundingplatforms and receive interest and capital gains tax-free. Otherwise, all lending interest is subject to taxation. P2P lending is not protected under the Financial Services Compensation Scheme (FSCS) and lenders’ capital is at risk. The IFISA provides support to some degree to lenders, but only of the lending platform they use is fully licensed.
Folk2Folk is a platform for secured loans for businesses. It matches individual business borrowers to individual lenders secured on property. Average returns on investment range from 5.5% to 6.5%. Since its launching in 2013, the platform has facilitated the distribution of more than £125 million in loans.