Whatever your opinion of the role of Government in free market economics, there is no questioning the importance of its stance and the value of a positive position to those operating in a market that has been touched by Government, like alternative finance.
Anything new in financial services poses challenges for Governments and questions like:
Is it a good thing? Should we regulate it? How can we get involved without compromising our neutral position?
The situation is arguably more complicated now given the sheer acceleration in disruption, driven by technology, which is leaving policy makers behind.
This week, at a seminar hosted by Interel, the Public Affairs consultancy, the attitudes of policy makers towards alternative finance were revealed in the launch of a paper called 'Banking on Innovation: Uncovering the Political Barriers to Innovative Financial Services'.
What was clear in the report was a low level of understanding exists among MPs and trust is yet to be established from a survey of approx 25% of MPs:
- A large portion of all respondents (35%) had either never heard of, or had a fairly poor understanding of crowdfunding and peer-to-peer lending. This low level of understanding is particularly pronounced among older and less-recently elected MPs: 43% for MPs over the age of 55 and 56% for MPs elected between 1992 and 1997. Regionally, there are significant variations: 62% of Scottish MPs and 43% of MPs in south west England reported a very low level of understanding, while among the English regions respondents from the Midlands were more likely to have never heard of crowdfunding and P2P.
- Nearly 50% of MPs are unsure about whether alternative finance providers are trustworthy and the sector still lags behind all others except payday for positive trust ratings
- A large percentage of the respondents from the Conservative and Labour parties (42% and 41% respectively) simply didn’t yet know whether the platforms’ interests, particularly crowdfunding and P2P, were aligned with those of consumers.