A flurry of companies are queuing for authorisation to open peer-to-peer (P2P) lending platforms to take advantage of a new savings product to invest in tech start-ups, Financial Conduct Authority said on Thursday.
The bottleneck in processing applications means choice of platforms may be limited for lenders until the FCA can review all the applicants.
The FCA said it had fully authorised eight firms to operate P2P platforms which enable people to lend small amounts of money to other individuals or firms, such as tiny start-ups developing new Apps, offering an alternative to banks.
A further 86 firms are waiting for approval, with 44 of them given interim permission.
The rush for P2P platforms comes just before the government launches on April 6 the Innovative Finance ISA, a tax free savings product designed to encourage more investment in start-up technology firms.
“Only P2P loans on platforms operated by firms with full authorisation will be eligible investments for the Innovative Finance ISA,” the FCA said in a statement.
The watchdog said it was keen to promote effective competition in P2P lending but it was important for firms to meet rigorous standards and for consumers to be protected.
The FCA said it can take up to 12 months to reach a final decision on whether to authorise a new platform.
“We are working closely with individual firms to ensure they meet the rigorous statutory standards and are authorised as quickly as possible,” the watchdog said.