RateSetter is targeting financial advisors with its new service - Business Insider

This story was delivered to Business Insider Intelligence Fintech Pro subscribers earlier this morning.To get this story plus others to your inbox each day, hours before they're published on Business Insider, click here.The UK-based peer-to-peer (P2P) lender is set to launch a service targeting financial advisors in February 2020, per Peer2Peer Finance News. With the service, financial advisors will be able to access RateSetter's portal to help advise their clients on P2P investments. It has always been the plan to open up RateSetter to the advisor community, according to the startup's chief investment officer Mario Lupori, cited by Peer2Peer Finance News.

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The announcement comes after the UK's Financial Conduct Authority (FCA) introduced new rules in the P2P lending space, and could help RateSetter remain successful.The FCA's new rules — confirmed in June — include limiting investments for new retail investors to 10% of their investable assets. Likely in response to this, other P2P lenders have shifted their focus from solely focusing on individual retail investors to targeting institutional investors.Funding Circle, for example, closed its fourth securitization from Waterfall Asset Management, worth £232 million ($304 million), in July as part of the latter's £1 billion ($1.3 billion) investment in Funding Circle loans. RateSetter, on the other hand, continues to bet on individual investors to fund its loans, and currently has 80,000 self-directed investors on its platform.By working with licensed financial advisors, RateSetter has found a way around the new rules. The aforementioned investment restriction doesn't apply to those that have received regulated financial advice. Hence, by opening its platform to advisors, retail investors could potentially pour more money into RateSetter's platform.Additionally, with the P2P lending space getting more regulated and transparent under the new rules, as lenders will have to provide a minimum amount of information to investors and assess the knowledge and experience of consumers ahead of investing, it seems likely that financial advisors will be more willing to diversify a client's portfolio with P2P investments.The P2P lending space had a bumpy year in 2019, which will probably continue throughout the next year. In May, for example, Lendy went into administration after it was revealed that the P2P lender had rising default levels, and it was soon followed by Funding Secure.As the regulations shake up the industry and force players, including some of the biggest, like RateSetter and Funding Circle, to expand their services, we will likely see more smaller players struggle. And while tapping financial advisors will likely help RateSetter remain successful, it should also consider institutional investments to ensure there won't be any disruptions for borrowers on its platform.Want to read more stories like this one？ Here's how to get access: Sign up for Fintech Pro, Business Insider Intelligence's expert product suite tailored for today's (and tomorrow's) decision-makers in the financial services industry, delivered to your inbox 6x a week. /> /> Get StartedJoin thousands of top companies worldwide who trust Business Insider Intelligence for their competitive research needs. /> /> Inquire About Our Enterprise MembershipsExplore related topics in more depth. /> /> Visit Our Report StoreCurrent subscribers can log in to read the briefing here.