As many of you will know, there are changes coming to peer-to-peer lending as the industry adapts to enhanced rules published by the Financial Conduct Authority (“FCA”) earlier this year. These rules will come into effect on 9th December 2019. Whilst many of the changes will be subtle when using our platform, some of the changes will stand out.
From 9th December 2019, one of the most visible changes is that all peer-to-peer lending platforms will be obliged to follow the FCA’s rules regarding Appropriateness. In simple terms, these rules require each platform to determine whether a lender has the necessary knowledge and experience to understand the risks involved in peer-to-peer lending.
How will we assess Appropriateness?
All lenders, whether new or existing will need to undertake a short test. This will allow lenders to demonstrate their understanding of peer-to-peer lending and, to a degree, the Assetz Capital offering.
It’s important to understand that this isn’t a test designed to catch people out or prevent them from doing what they want to do. It’s there to protect lenders by ensuring that when they do choose what they want to do, they understand what it is that they’re getting into. At Assetz Capital we have always taken care to point out the risks to our lenders, so we fully support this new rule. What’s more we believe that it has a positive part to play in making sure that people get an investment that they want and understand.
It is worth noting that new investment will not be possible from 9th December 2019 until a lender passes the test – this is a direct outcome of the FCA rule so please keep that in mind.
What will the test be like?
The test is short: only seven questions. All of the questions are multiple-choice so there is no need to type in long answers. We expect the test will take most lenders ten to fifteen minutes to complete.
You can take the test in your dashboard – just log in, take the test and you’re done.
The pass mark for the test is set at 70%. However, we have classified a small number of questions as “critical” questions so as well as scoring 70% overall, you have to get those questions right. These “critical” questions relate to things where we believe that there really isn’t any room for confusion or doubt; to give you an example – and without wishing to give too much away in terms of the questions – we don’t think that someone should be able to pass the test if they don’t understand that their capital is at risk, even if they get all of the other questions right. We’re not trying to be harsh or make the test difficult, we’re simply trying to protect those that need it most.
The test provides feedback after each question, helping to round out your knowledge and make sure that you’re making properly informed choices.
What happens if I "fail"?
Don’t think of it as failing. Think of it as identifying some gaps in your knowledge that the feedback (and the resources mentioned below) will help you to fill. This is about giving you the confidence that you know the things that you really ought to know to make an informed decision. Once you know them, you’ll pass the test.
There is no limit to the number of times that you can take the test and no penalty if you need more than one attempt.
Are there any resources available to help me?
Yes. We’ve recently revamped the pages of our website which cover the kind of topics included in the test (and much more). These pages have been designed to be a valuable resource to lenders who are new to peer-to-peer lending, or to the Assetz Capital platform, but these resources are available to anyone and everyone. You can access them here.
In case you are wondering: that’s not cheating. The goal is to make sure that people know what they need to know, understand the risks involved and are able to make sound choices. If you read the resources that we make available and that achieves the goal, it’s not cheating – that’s mission accomplished.
When can I take this test?
While the rule doesn’t technically apply until 9th December 2019, we realise that your first login on or after 9th December might not be the most convenient time for you to take the test: you might be short on time and just want to get something done quickly before logging off again. With this in mind we are deploying the test early so that you can pick a time that suits you to do it.
It’s available now for you to take at your convenience. Just log in to your account and start the test. And don’t worry, even though you may take it before 9th December, it will still count. You won’t have to take it again!
How often will I have to do this?
This isn’t something that you have to do regularly. If a peer-to-peer platform changed its model or its offering to such an extent that you might no longer know what you need to know about them and their product, they might have to re-issue a new test. Otherwise though, regular re-sits are not something that you need to think about.
We hope that, like us, you’ll see this as a positive step for lenders and for the industry as a whole.
- November 28, 2019