Funding Circle, LendingClubCorp. and Prosper MarketplaceInc. on April 6 announced the launch of the Marketplace Lending Association,a U.S. nonprofit membership organization created to promote responsible businesspractices and sound public policy to benefit borrowers and investors.
According to a news release, the Marketplace Lending Associationhas established the marketplace lending operating standards, which is a code ofbusiness conduct addressing transparency for investors, responsible lending, governanceand controls, and risk management, to support the responsible growth of marketplacelending. The association also plans to engage with policymakers and other stakeholdersto inform sound policy development that supports the growth of the marketplace lendingindustry.
The Marketplace Lending Association is governed by a board, whichwill initially consist of one director nominated by each founding member. As moremarketplace lending companies join the association, additional directors will beelected based on a vote of the full membership. The association intends to hirean executive director and staff as it continues to expand.
Membership is open to marketplace lending platforms that meetthe membership criteria and commit to the marketplace lending operating standards.
The formation of the association follows Comptroller of the CurrencyThomas Curry's advicethat banks should innovate in a safe and sound manner that minimizes risk. Marketplacelenders at the March 31 SNL Community Bankers Conference encouraged community banks to partner with them, saying thebanks can utilize their superior technology to compete with larger banks by offeringmore user-friendly delivery channels. The marketplace lenders also said they believethey are ready to handle the regulatory scrutiny that comes with the agreements.
The OCC also released a white paper that outlines eight waysthe agency plans to implement fintech regulation, including potentially openinga new office dedicated to innovation.