Friday, February 29, 2008

A bump in the social lending road?

A few weeks ago, Canada's first person-to-person lending platform community opened its doors with the launch of IOU Central. At the time, there was some discussion about which regulatory bodies would oversee this industry in Canada. The position taken by IOU Central was that there were essentially no watchdogs, and they based their operation on the Prosper model.

Well, it seems that Canadian P2P lending may have some watchdogs after all. According to IOU Central's website, they are currently operating with "limited functionality" while they "resolve a regulatory matter". During this downtime, users can not post new loans, nor can they place bids on loans. The only activity is the repayment and servicing of funded loans under the borrower and lender agreements.

This is an interesting turn of events, as IOU Central seemed to come out of nowhere, while the CommunityLend project has been working on regulatory and technical requirements for ages. The difference, of course, is that CommunityLend seems to be aiming to have its ducks in a row before launch, rather than going off half-cocked. It's possible that IOU Central's "regulatory matter" is actually very minor, and they'll be up and running again soon, but it looks to me as if they rushed to market, and are now paying the price for their lack of preparation.

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