The Financial Supervisory Commission (FSC) yesterday urged the public to be wary of potential risks regarding the launch of lend.com.tw (鄉民貸), the nation’s first Web-based peer-to-peer lending platform.
“Current regulatory guidelines do not extend to peer-to-peer lending platforms,” Banking Bureau Deputy Director-General Lu Hui-jung (呂蕙容) told a news conference, adding that there is no legal basis for the commission to regulate the fledgling service.
Lu said that the service might be in violation of the Banking Act (銀行法), which stipulates that any organization other than a bank shall not accept deposits, manage trust funds or public property under mandate, or handle domestic or foreign remittances.
The commission is expecting more platforms of a similar nature to emerge in the near future, Lu said.
The commission is drafting regulatory guidelines, which are expected to be completed in May, she said.
In the meantime, the public is advised to be cautious of potential risks, she added.
Lu’s warning came as lend.com.tw began operations yesterday, raising questions over whether the new online platform represents an innovative service or exposes consumers to financial risk.
Lend chief executive Tony Huang (黃智康) said that its service represents a milestone in the international revolution toward the “democratization of finance.”
“Banks pay interests rates of 1.2 percent for deposits, while charging 15 percent for credit card financing. Our service aims to bypass the hegemonic hold of financial institutions by providing higher returns for lenders and lower interest obligations for borrowers,” Huang said.
Huang said that based on the nation’s Civil Code (民法), which allows for contracts of loans for consumption between parties, there are no laws barring the company’s services in Taiwan.
In addition, the company does not accept deposits from its members, and the new peer-to-peer platform only matches lenders and borrowers, therefore it does not require approval from the commission, he said.
The company said that it charges fees ranging from between 1 to 3 percent, and that members can gain yields as high as 20 percent through investment loans on amounts as little as NT$1,000.
Soochow University accounting professor Shen Da-bai (沈大白), who also serves as a supervisor on state-run First Commercial Bank’s (第一銀行) board, is also head of the online platform’s risk management control team, the Chinese-language Apple Daily reported yesterday.
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