Investor protection is paramount, and present regulations should not be relaxed
In a recent article in the financial review on today’s date, Rate Setter and Society One argued that the current Australian regulations are adequate and flexible enough. Furthermore, any relaxation or graduate regulation could threaten the confidence in the emerging business model.
Here at Marketlend, we completely agree with Society One and Ratesetter’s arguments. As one of the only four operational peer to peer lenders, Marketlend sees that the present regulatory environment is a suitable and appropriate environment to enable the development of the fintech industry and protection of the investors.
The biggest risk for the P2P lending industry, a fintech industry, is the loss of confidence of investors, and the suggestion to weaken their protections could be a catalyst to such a loss. PayPal Australia, an obvious conglomerate with the ability to pay compliance costs for operating within this environment is pushing for something that you would consider unlikely necessary for such an entity.
If Paypal wishes to act like a bank, why shouldn’t it comply with the same requirements that banks are required to, and if it thinks that other competitors are not being treated in the same way, then why doesn’t it use its legal avenues to seek remedies.
It would seem that the Murray inquiry was not aimed at entities like PayPal, but at smaller start-ups that do not have the capital and resources to meet the same regulatory requirements as a bank. It is hard to see how PayPal fits within that category.
It begs a question, is Paypal arguing for its own better good or for the good of the fintech industry?
For Marketlend, we see that the Australian regulatory environment is well established, effective and tested through the courts. The present regulation was materially the same regulation in place during the global financial crisis. If an entity can abide by these regulations, then we would hope that investors are comfortable with these protections and are comfortable that when the next financial crisis arrives they will be protected.