Dáil Éireann Debate, Tuesday - 20 June 2017
259. Deputy Frank O'Rourke asked the Minister for Finance the regulations with regard to peer to peer lending; if there is recourse for lenders in the event of borrower default; if there is protections for borrowers in the event of default; if there is regulation of the platforms; if there is regulation of the provision of a peer to peer loan; and if he will make a statement on the matter. [27321/17]
Amharc ar fhreagraAs the Deputy will be aware, peer-to-peer lending is a form of crowdfunding. Crowdfunding involves obtaining small amounts of funding from a large number of different sources, generally individuals but they can also be institutions. Peer-to-peer lending involves lenders providing money directly to borrowers as a loan that is to be repaid with interest through an online crowdfunding platform.
Crowdfunding is an innovative, technology-based form of finance that can be a valuable source of funding for SMEs, either as a complement, or as an alternative, to traditional bank finance. Crowdfunding can provide consumers and smaller investors with a higher rate of return, at a higher risk, than is generally available from deposits or traditional investments.
Crowdfunding, including peer-to-peer lending, is not currently a regulated activity in Ireland. Therefore, there is no regulation of crowdfunding platforms or the provision of peer-to-peer loans. Given this, there are no formal consumer protections available for borrowers using a peer-to-peer lending platform, including in the event of default. The Central Bank of Ireland has issued an information notice alerting consumers to this fact and the associated risks, available at:
https://www.centralbank.ie/consumer-hub/consumer-notices/consumer-notice-on-crowdfunding-including-peer-to-peer-lending
The European Commission has indicated that harmonised European regulation of crowdfunding is not anticipated at present.
The IFS 2020 2017 Action Plan commits the Government to conducting a public consultation on the potential regulation of crowdfunding, having regard to international best practice and in the context of the EU Commission Action Plan on Building a Capital Markets Union. My Department recently launched a public consultation on the regulation of crowdfunding that closed on 2nd June 2017.
My Department will now consider the submissions received from the public consultation and these will help inform my Department's policy position on whether or not a regulatory regime for crowdfunding would be appropriate and if a bespoke regime should be implemented in Ireland.
