Last month, Bovill, the specialist financial services regulatory consultancy reported that 30 P2P lenders had withdrawn their FCA applications, saying the figure raised concerns over the ability of firms to meet new regulatory requirements.

Bovill’s report was released just days before the collapse of Swedish P2P lender TrustBuddy AB, which filed for bankruptcy following suspected misconduct within the company.

This was followed by an announcement from the Peer to Peer Finance Association (P2PFA) which said it would be introducing new operating principles to strengthen transparency and risk management in the sector.

Last week, the FCA set out its thinking about possible changes to its Handbook following the creation of the Innovation Finance Individual Savings Accounts (IFISA) and their impact on the regulated loan-based crowdfunding sector.

To find out how these changes will affect the industry, B&C spoke to P2P lending platform, RateSetter, which is looking to gain full authorisation.

The platform, which is a founding member of the P2PFA, said the sector had proactively sought to be regulated for a number of years in order to give greater protection and clarity to customers.

“We think that the FCA has taken a sensible approach by bringing platforms into full regulation on an interim basis in April 2014, while supporting innovation, growth and competition,” said John Battersby, Head of Communications at RateSetter.

“Before the end of October, we applied to the FCA to move from interim to full authorisation, and we hope to complete that process over the coming months.”

However, the cost of becoming fully authorised doesn’t come cheap.

“This year we will spend half a million pounds on regulation, and there will be ongoing annual compliance costs of a similar size too,” John revealed.

When B&C asked John how firms would cover the cost of authorisation and regulation, he warned that some firms may face difficulty.

“There is a strong possibility that some platforms will either not get through the regulatory process, or will decide not to continue,” said John.

“When you have a fixed cost of around £500,000 that wasn’t there a year ago, it can change the economics of your business,” John concluded.