Since the Retail Distribution Review(RDR) was implemented in 2003, financial advisers cannot receive a commission from product providers. The new regime was a significant improvement over the previous one where small investors got “free” advice only to be invested into high-cost investment vehicles chosen primarily for the commission that the fund would pay the adviser.

The FCA is now mulling whether to extend this regime to P2P lending products as well. If the FCA follows through on this, providing advice on P2P lending will become a regulated activity just as P2P lending itself is. As I have highlighted before, peer-to-peer loans are a more attractive and easily understandable investment product for most retail investors than even equity mutual funds. It is only logical that the same regulatory principles should apply to all advisory services related to a client’s investments. The FCA’s move is welcome and represents another step in the road towards peer-to-peer lending becoming a mainstream investment option for all investors in the United Kingdom.