In response to the news that startup peer-to-peer lender ‘Quakle’ has closed, Chairman of the Peer-to-Peer Finance Association Giles Andrews said: “Quakle was not a member of the Peer-to-Peer Finance Association. We spoke to them about joining but they said they were not able to adhere to the Association’s strict Rules and Operating Principles. These were established to provide robust consumer protection in the current absence of appropriate regulation.

The Association continues to lobby actively for formal regulation to be established and is hopeful that this will happen in time. Quakle was tiny – its loans represented less than 1/100th of 1% of total UK peer-to-peer lending. Members of the Peer-to-Peer Finance Association (Zopa, RateSetter and Funding Circle) are all well-capitalised businesses that use rigorous credit risk assessment processes and criteria to ensure that only creditworthy and reliable individuals and businesses can secure a loan.

These thorough and sensible business practices have proven to be extremely effective – including keeping default rates extremely low – to the benefit of lenders, borrowers and the prospects for peer-to-peer finance in the future.