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Australia’s peer-to-peer lending industry nearly doubled its loan originations this past financial year writing $300m in loans, according to a recent ASIC report.
Peer-to-peer lending, also known as marketplace lending, matches people who have money to invest with people who are looking for a loan. Providers often use online platforms to connect consumers and SMEs with this alternative source of funding.
More than 18,500 consumers and 201 businesses borrowed $300m in the 2016-17 FY, compared with $156m in 2015-16. More than 7,760 investors provided financing to the platforms. Overall, the level of activity reported for this past financial year doubled in both the number of borrowers and the total amount borrowed since 2015-16, ASIC's data shows. The results of the survey are based on responses from 12 marketplace lending platforms.
The average interest rate charged for these loans was 10.5%. The majority of businesses (77%) were charged an interest rate of between 12-15.99% and the majority of consumers (55%) were charged between 8-11.99%.
There was a moderate rise of 1.6% in overall default rates, to 2.2% during the period. The number of complaints received by providers remains generally low, however, there was an increase in reported breaches and instances of fraud and cyber incidents, ASIC found.
ASIC Commissioner John Price said the results of this survey, the second ASIC has undertaken, show that the industry is continuing to grow across borrowing and lending, and is continuing to mature.
“This survey helps ASIC to better understand and regulate these businesses and to identify areas to monitor in future,” he said.
ASIC conducted the survey between August and September 2017 and focused on marketplace lending providers that provide financial products or services. The survey relates to the participants' business activities for the financial year ending 30 June 2017.
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