Ministry Moving to Regulate P2P Lending Sites as Financial Services
The Ministry of Finance is looking to regulate peer-to-peer loan brokers under the same section of law as quick loan providers.
Peer-to-peer microloan brokers lend money to unrelated individuals, or "peers", without going through a traditional financial intermediary such as a bank or other traditional financial institution. This lending takes place online on using various different lending platforms and credit verification tools.
Currently P2P microloan sites don't have to adhere to principles applicable to other loan providers. They are not treated as lenders but loan brokers and are not subject to Financial Supervision Authority oversight, writes Eesti Päevaleht.
Yet a campaign run by one P2P site, Isepankur - which recently received an investment of 1.3 million euros and is rebranding itself as Bondora for the international market - seemed very much like some quick loan ads, said the daily: "take out a [...] cheap loan and participate in a prize drawing!"
The company doesn't have to publish data on its annual percentage loan rate and monitor its postings for possible disparities - requirements that apply to quick loan lenders. The only requirement is they were ordered by the Consumer Protection Board to display a warning that the services they intermediate are financial ones.
Ministry spokeswoman Liisi Poll says equal treatment should be the operative principle, which means that brokers such as Isepankur could soon be regulated more closely.
The Economy Ministry has pledged to subject the field to the same standards of balanced interests and keeping consumers from being rushed into a loan decision applied elsewhere in the financial services sector.