Regulating peer-to-peer (P2P) lending: a comparative study of the UK and China

P2P lending is a method of debt financing that connects individuals and/or SMEs (Small and Medium-sized Enterprises) for direct lending and borrowing through an online platform. As an alternative financial method, its significant growth enhances financial inclusion by lowering the threshold for accessing lending services. However, P2P lending users, as consumers, bear excessive risks associated with this tripartite trust-building lending service, necessitating tailored regulation to ensure sufficient protection for them. This thesis examines the narrative of both unsecured and secured P2P lending from the perspective of consumer protection, identifying that P2P lenders are vulnerable and justifying the need for an interventionist regulatory approach to protect them. To understand P2P lending in the market and the regulation, and then to explore a tailored regulatory paradigm for protecting P2P consumers, this thesis compares two of the most important P2P lending markets, China and the UK. Drawing lessons from China's failure and the UK's regulatory experiences in this area, this thesis finds that P2P lending platforms are a unique form of digital lending intermediary, distinct not only from pure information intermediaries but also from traditional financial intermediaries. Therefore, the regulation cannot be simply mirrored to either. This thesis argues that fault-based liability is insufficient to address regulatory difficulties and that holding platforms liable for certain wrongdoings on their platform is justified. It proposes a regulatory paradigm that includes enhancing the platform's liability by applying gatekeeper liability to P2P platforms, emphasising prudential regulation, and adopting a look-though approach to regulate emerging P2P loan securitisation.