keep The Financial Services and Markets Act 2000 (Collective Investment Schemes) (Amendment) Order 2021
This Order amends the definition of 'collective investment scheme' in the Financial Services and Markets Act 2000 to exempt certain peer-to-peer lending arrangements. Specifically, it excludes from the definition arrangements operated by authorized electronic lending platform operators (article 36H RAO), including related holding of client money, compensation mechanisms for lender defaults, and arrangements connected to winding up such operations. The effect is to provide regulatory clarity that P2P lending platforms do not constitute collective investment schemes, removing a potential regulatory barrier for fintech lenders.
This amendment DEREGULATES by carving out peer-to-peer lending from collective investment scheme definitions. Deleting it would reintroduce regulatory ambiguity that could capture P2P platforms as collective investment schemes, subjecting them to requirements designed for traditional investment funds. This would harm competition in lending, raise costs for borrowers, reduce returns for lenders, and drive business to less regulated jurisdictions. The amendment correctly recognizes that P2P lending arrangements do not present the same investor protection concerns as pooled investment vehicles and should not be regulated as such.