VIAINVEST takes part in development of industry guidelines for suitability and appropriateness evaluation of IBF clients

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After the Financial and Capital Market Commission (FKTK) has initiated changes in the peer-to-peer lending industry aiming to transform existing business environment into regulated and supervised industry, majority of platforms, including VIAINVEST, currently carrying out business activities of selling claim rights have engaged in licensing process to obtain an IBF (Investment Brokerage Firm) license. As the goal of licensing is to establish equal terms of operations for all market players holding the IBF license, VIAINVEST is honored to work along with the Alternative Financial Services Association of Latvia and P2P platforms like Mintos and TWINO to carry out first industry guidelines for investor suitability and appropriateness assessment in order to ensure investor protection through a single market approach.

“We are excited about upcoming changes, as regulated market brings a lot of benefits for both platforms and investors. Customer protection has always been a key value for us, and after the industry has witnessed several platforms collapsing over this year, I believe it is a common goal to finally set equal terms for all market players,” says Eduards Lapkovskis, CEO of VIAINVEST. “Investor suitability and appropriateness evaluation framework we have developed together with the Association is a valuable outcome of productive cooperation between market players who has been present for quite some time and strives to strengthen the industry.”

Suitability and appropriateness assessment guidelines contain recommended principles and examples of good practice, the primary purpose of which is to ensure investor protection through a single market approach. As the regulation requires IBFs to evaluate their customers’ knowledge on financial instruments and investing, guidelines will help prospective market players to develop comprehensive knowledge and experience evaluation tests to ensure high investor protection level. The guidelines are of a recommendatory nature, therefore not binding on market participants and, accordingly – applied by market participants on the basis of good faith.

VIAINVEST has been actively engaged in cooperation with the prospective industry supervisor FKTK and has reached the final phase of the licensing process. As a result of the licensing VIAINVEST will become a participant of a regulated financial and capital market, and will provide services of initial placement of financial instruments and execution of investors’ orders for actions with financial instruments. Currently, the platform provides consumer loan claim rights trading, primarily based on the assignment agreement. Once licensed, these claim rights will be securitized i.e. they will become available for investment as asset-backed securities. However, for the convenience of current customers, VIAINVEST intends to maintain the previous user interface as much as possible. Subject to the requirements of the Investor Protection Law, in the event when the company has not registered financial instruments or the financial instruments have been permanently lost, the statutory class of investors shall be entitled to compensation of 90% of the invested amount up to EUR 20 000, ensured by FKTK.

More information on the guidelines can be found in the the Alternative Financial Services Association of Latvia website (currently, the document is only available in Latvian).