Estonian Financial Supervision Authority (FSA) has granted Bondora a credit provider licence. The FSA is the main regulating body in Estonia which governs and oversees all banks, credit providers, credit intermediaries, insurance companies, insurance intermediaries, fund managers, investment and pension funds, investment firms, E-money institutions and payment service providers.
The application process has been very thorough and we have been working extremely hard for nearly a year to fully comply with all of the stringent requirements set out. We are delighted to announce that as of yesterday (21st March 2016) we are regulated by the Estonian Financial Supervision Authority.
What impact will the credit provider licence have?
The supervision authority helps to ensure that financial institutions are able to meet their obligations towards their customers and that the companies provide service that is of highest of standards. The regulatory framework for credit providers is in place in order to protect all our customers.
What do the regulatory changes mean for Bondora?
The Estonian Financial Supervision Authority has gone through all our processes and documentation ensuring that Bondora as a company is financially stable, its management and staff have the necessary experience and skills to operate the business, all data protection requirements are met, necessary risk management routines are in place and that our processes are in accordance with the applicable rules (such as customer identification and underwriting). The regulations also require Bondora to have independent financial and internal auditors. All this will give customers more confidence that Bondora will still be around for years to come.
What do the regulatory changes mean for Bondora’s customers?
This is a positive development for our investors and borrowers. In active dialogue with the FSA we have developed a greatly improved operating structure that will align the interest of borrowers, investors and Bondora in a way that is unmatched in Europe.
Bondora has skin in the game now. What does it mean exactly?
- 1. Bondora will stand side-by-side with retail investors on our marketplace. Bondora will retain a share of each loan.
- 2. Investor capital will not be locked up until a sale is made. Bids to buy different claims are non-binding and can be withdrawn at any time until the closing of the transaction.
- 3. Investors will have more access to lower risk loans. Capital is deployed in a way that lower risk loans are sold prior to higher risk ones.
As a result, we hope that all this will give increased confidence to everyone lending and borrowing through our platform.
What do the regulatory changes mean for the P2P lending?
Customer trust is key to success in peer-to-peer lending. Estonian Financial Supervision Authority is the second regulator in Europe to take over responsibility for governance of a consumer P2P platform. The UK’s Financial Conduct Authority (FCA) rolled out its regulatory model in 2014. Appropriate regulation offers assurance both for investors and borrowers and ensures sustainable growth of the industry as it catches up with traditional finance.