FSA to tighten regulations for online social lending brokers

Yomiuri Shimbun file photo
The Financial Services Agency

TOKYO (Jiji Press) — The Financial Services Agency is set to tighten regulations on brokers of social lending, which allows individuals and organizations to borrow and lend money online, informed sources have said.

The FSA plans to oblige social lending brokers to provide information to investors on a regular basis.

Social lending is popular among young people as it allows users to easily invest small amounts of money. Meanwhile, problems linked to social lending services have been reported as rules have yet to be developed.

The government’s Financial System Council is slated to compile an interim report on the issue by the end of the month.

Based on the report, the FSA will consider detailed plans on how to tighten regulations, including possible revisions to the financial instruments and exchange law and a Cabinet Office ordinance.

In June last year, the FSA suspended operations at a social lending unit of major Japanese online financial firm SBI Holdings Inc. for one month, saying that the unit had failed to detect the use by a borrower of money raised from investors through the unit for purposes other than those designated.

Following the development, a working group under the Financial System Council has since last autumn been discussing ways to tighten regulations on social lending brokers.