Peer-to-Peer Lending – A New Digital Intermediary, New Legal Challenges

Abstract

In an increasingly digitalised world, this article deals with peer-topeer (P2P) lending as a new online source of financing, which differs from e.g. financing in traditional banks. The article elaborates on the following questions: How should P2P lending be put in the context of the existing legislation? Is the existing legislation sufficient to meet the impact that P2P lending may have on modern society? Or is new special legislation necessary? Lenders can be both individuals and companies, but the main focus of this article is on individuals. It includes the European Commission’s Proposal for a Regulation on European Crowdfunding Service Providers (ECSP) for Business (COM/2018/0113 final) and parallels are drawn to syndicated loans known from banking. How P2P lending fits into the existing legal framework in regard to banks, payment services, money laundering and terrorist financing, consumer credit, investor protection etc. is still veiled in some uncertainty. The most remarkable example of the legal implications is the case of TrustBuddy AB. On 23 June 2014, the Danish financial supervisory authority (FSA) decided that the P2P platform, TrustBuddy AB, needed to be licensed as a bank. The FSA concluded that TrustBuddy AB was not a credit intermediary and in reality, the lenders were investors. To create a sound business and to promote an EU market for P2P lending, a further clarification and adjustment of the existing legislation may yet be needed; especially since there are still several legal challenges in regard to private individuals being peers.