This is an interview we conducted with the recently appointed new Chair of the Peer to Peer Finance Association (P2PFA), Paul Smee.
Congratulations on your recent appointment as Chair of the P2PFA. Perhaps you can provide a quick background on yourself?
For the last eighteen years, I have been CEO of three trade bodies, the Council of Mortgage Lenders, the Payments Council and the Association of Independent Financial Advisers. I have also been a TV regulator; a civil servant; and I arranged a visit for Boris Yeltsin to the London Stock Exchange.
You have a rich history with trade bodies. For our readers, who are generally lenders on peer to peer lending platforms, can you describe the benefits of having a strong industry trade body?
Trade bodies are good for helping markets to work better – in the interests of consumers and players alike. They can spread best practice just as the P2PFA does with its Principles; they can also be an effective contributor to shaping regulation and developing good communications with bodies such as the FCA and Treasury. They are also a force for education, raising the profile of their members and explaining the advantages of their market.
What are your first thoughts on the state of the industry?
I am pleased to be in a body which actively sets standards for the market and which wants the market to grow and succeed. We can do more to explain what P2P means. I am interested at how many different explanations I get from contacts when I tell them of my new role.
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It’s been cited that the P2PFA changed its operating principles to accommodate its largest member, Funding Circle. Do you have any comment on this?
The Operating Principles need to be realistic and reflect a practical market place which delivers for borrowers and lenders alike. They will need adjusting as the market itself changes and its participants’ businesses change. But adjustment does not mean that the spirit of the principles is abandoned. You get the same result by different means which reflect the realities of how business is transacted. The great advantage of market-based regulation is that you have the flexibility to do this and to cope with unintended consequences of regulatory requirements.
Are there any plans to update the operating principles further to widen the reach of the P2PFA?
I hope that this doesn’t sound trite but we will keep ensuring that the principles are fit for purpose and will adjust them as things change. I am a great believer in the John Maynard Keynes quote: “If the facts change, then I change my mind”. I would love to have more members on board because I think that we offer good information services to members and are increasingly influential in our contacts with regulators.
The P2PFA is often credited with helping the industry become a regulated market. What is next for the P2PFA?
The elephant in my room is the FCA implementation review, the outcome of which has been imminent for months! We have a great task in ensuring that whatever the regulator decides, the market is ready to respond to it and can effectively implement it. We may have some battles to fight on the way, as well.