Peer-to-peer lending, the business model on which some bridging companies and other funders are based, is to be regulated.
The announcement was made at the Peer-to-Peer Finance Policy Conference.
Trade body the Peer-to-Peer Finance Association said it welcomed the news.
In a statement it said: “The Peer-to-Peer Finance Association has provided clarity and protection for consumers and businesses, but we have always strongly believed that introducing proportionate regulation was necessary to enable the sector to continue to flourish.
“We are committed to working closely with the Government and the Financial Conduct Authority over the coming months to build the right framework for our future.”
The Peer-to-Peer Finance Association was set up in 2011 by the three largest peer-to-peer finance companies in the UK – Funding Circle, RateSetter and Zopa. Its code of practice includes segregation of participants’ funds.
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