News: Ablrate Appropriateness Test 06/12/2019
From Monday 9th December 2019 the FCA has stipulated that Peer to Peer Lending Platforms like Ablrate, will have to adhere to a number of additional rules and regulations. These include an Appropriateness Test for our lenders as well as minimum disclosure requirements and greater levels of transparency.
The good news is that the majority of the new loan disclosure requirements are already clearly set out within our Borrowing Proposal, on our platform and within the loan contracts thus meeting the demands of transparency.
We have reviewed and updated a number of our FAQ’s to clarify and improve them in line with the requirements.
Today, we are writing to inform you about the most visible change to the regulations and the new additions to our website. We are introducing as required an Appropriateness Test, which you will be required to complete whether you are a new lender or returning to make a further investment.
The appropriateness test and the FCA requirements behind it have been put into place to ensure Lenders’ experience and knowledge are evaluated so that we can be sure that each platform user understands the Peer to Peer loans market and therefore the risks involved.
How Will the Appropriateness Question Work?
The Experience Question is designed to help us understand your investment background and experience.
It is very simple: just read the criteria for each lender category and tell us based on your own experience which category you identify yourself in. If you identify yourself as either a High Net Worth or Sophisticated Lender, our Customer Service team may carry out follow up checks to ensure that this is correct.
Ablrate may develop products that may require differentiation between different lender categories and thus eligibility to them, however at this time all lender categories are able to invest in our current product range.
NB: If you class yourself as a retail investor, the FCA stipulate you should not invest more than 10% of your net investable assets in P2P lending. Please consider this stipulation carefully when selecting your lender category.
You will be able to reclassify yourself in the future if you feel your experience and knowledge levels change. For example: You classify yourself as a Retail Lender initially and having made a number of investments, you increase your knowledge of the marketplace and the risks associated with Peer to Peer lending, you are free to re-classify to ‘Sophisticated’ and lift the 10% restriction.
How Will the Knowledge Test Work?
Ablrate is required to ensure you understand the risks before lending/investing on the platform. Lenders will need to achieve 80% to pass and you will be given the opportunity to review those questions where incorrect statements were chosen.
If you get a number of questions wrong, please do not be concerned. Our FAQ section provides a comprehensive overview of the Peer to Peer marketplace and how Ablrate operates. All the information required to improve your knowledge is available on the site. Please spend some time reading the relevant sections and make sure you understand before re-taking the test.
It is an FCA requirement that we do not accept any new deposit or investment from new or existing lenders until these brief tests have been completed.
A lender has the opportunity to take the test three times, if unsuccessful you will be automatically locked out for 7 days. If that happens you may contact our customer service team who can unlock your account earlier to allow you to take the test again if you feel your understanding of the risks and the marketplace have improved.
Preparing for the Test
If you are comfortable with your experience, please take the opportunity to complete the tests. However, we would encourage all lenders to re-appraise themselves of the latest information we have published by visiting our FAQ section. Having done so, you should feel in a better position to take the knowledge test.
Do Lenders Need to Complete This Each Time They Log in?
Once you have completed the brief test, you will not need to repeat the exercise each time you login. The FCA has not stipulated a requirement for regular re-assessment, however, it may be a requirement to repeat the process on an annual basis or as and when Ablrate brings in new or different products or services. We will provide an update to lenders as necessary.
Although the procedure has been fully tested, we will launch the new requirement on the Ablrate platform at midday tomorrow Friday 6th December initially for the afternoon. If any issues require our attention, they will be worked on and relaunched in preparation of the Monday deadline.
We thank you for your continued support.