The gulf between the quality of peer-to-peer lender platforms in the UK and China may at last begin to narrow, as Chinese regulatory authorities move to block the rampant fraud that has bedevilled the industry in the People’s Republic.

The UK situation has been radically different from the outset, with peer-to-peer lenders for the most part positively demanding proper regulation of their industry. As a new source of finance, they have been keen to establish trust among investors and consumers alike from the very start. Regulation, as embodied by the golden standards set out by the FCA, is widely regarded as the best in the world and Chinese authorities have been studying them closely.

In China, a near-complete absence of regulation has resulted in hundreds of platforms disappearing in the previous year, while hundreds of others are emerging with little means of assessing the degree of risk they pose to investors.

The China Banking Regulatory Commission (CBRC), the Ministry of Public Security, the Ministry of Industry & Information Technology and the State Internet Information Office have between them now drafted new regulatory rules, which will oblige all platforms to publicly disclose aggregate loan information and performance. To improve transparency, each Chinese peer-to-peer lender will be required to register with local financial authorities and will be compelled to act only as information intermediaries and not, as is currently commonplace, as “credit intermediaries.”

The declared aim of the Chinese Government is to foster a healthy industry that is better able to meet the financial needs of small and micro enterprises – a sector of the economy that was effectively barred from access to funding until online alternative finance platforms appeared.