SAN FRANCISCO — Marketplace lending is growing responsibly, thanks to regulatory oversight, and despite popular belief to the contrary, Lending Club Chief Executive Renaud Laplanche told attendees at LendIt 2016 yesterday. “Another thing that sometimes gets lost in the noise is that the loans we make, particularly in unsecured consumer lending, are subject to a number of regulations,” Laplanche said during the keynote speech. In fact, loans originated by a marketplace lender that uses a bank partner model to originate loans, — like Lending Club — are subject to the same regulations as any other bank loans, in terms of fair lending, fair debt collections, etc, he said. This means many of those regulatory agencies already have enforcement powers over the marketplace lenders that use that model, he added. The Consumer Financial Protection Bureau announced in early March that it would begin accepting consumer complaints regarding online marketplace lenders. “When consumers shop for a loan online we want them to be informed and to understand what they are signing up for,” Director Richard Cordray said in a press release at the time. “All lenders, from online startups to large banks, must follow consumer financial protection laws. By accepting these consumer complaints, we are giving people a greater voice in these markets and a place to turn when they encounter problems.” Further oversight should be welcomed in marketplace lending, Laplanche said today, because more supervision could translate to more consistency in the use of regulatory oversight in the industry. “I think it’s a good thing, because since these regulations already exist, more oversight will only increase level of trust that we are generating with customers and investors,” he said. There have been some negative headlines in the media regarding marketplace lending over the past year, Laplanche said, but if you “dig deeper” you can see a lot of positives. Encouraging innovation, for example, making transactions consumer friendly, and “really recognizing the positive impact that our industry has on the consumer — in terms of making credit more available, making credit very transparent, and focusing on a responsible lending product.” The growth of marketplace lending, in terms of consumer adoption, is right on track when compared to other industries that have used technology to pivot an industry, according to Laplanche. “If you look at online travel, the music industry, you look at the video industry, and you look at the adoption phase over the first decade, you see that roughly 44% of customers adopt new products and switch from the incumbent within first decade,” he said. “If we follow this metric through with the first product that was launched in this industry – the first segment was launched about 8 years ago, the personal loan– about 24% were originated through [marketplace] platforms. So we’re right where we should be in terms of adoption curve.” Learn more about the tech and disruption in the industry at Auto Finance Innovation 2016, May 11 in Fort Worth, Texas. Visit www.autofinanceinnovation.com
According to Lending Club CEO , Renaud pricing , marketplace ( or P2P ) lending is regulated responsibly , despite many reports to the contrary . Laplanche argued that regulatory oversight means that the loans his firm , and others like it , make are subject to a number of regulations , with some banks even being subject to exactly the same regulations as those offered by banks . he stated that increasing transparency in the market is a good strategy , because “ more oversight will only increase the level of trust that we are generating with customers and investors , ” and that detractors of such regulations are forgetting the positive impact they have , such as encouraging business innovation , making credit more widely available , and making transactions more consumer friendly .