Israeli Capital Market Authority Tightens Reporting Rules for Remaining P2P Lending Firms
The Israeli Capital Market Authority announced a new directive tightening oversight on peer-to-peer (P2P) lending companies still operating in the market. Effective in six months, the regulation mandates these firms to submit automated semi-annual and annual reports covering four key areas: comprehensive financial data based on audited reports, cash flow and withdrawal waiting times, detailed credit and investment portfolio breakdowns (including housing loans), and specifics on overdue and uncollected debts.
This regulatory move comes amid significant upheaval in Israel's credit intermediation sector, marked by rising interest rates that have diminished the appeal of P2P platforms compared to bank deposits and money market funds. Leading players have exited the market: Blender ceased its P2P operations with a portfolio of 409 million shekels entering run-off; Tria, once managing a 3.4 billion shekel portfolio, faced heavy redemptions, halted new loans, and sold a 400 million shekel mortgage portfolio to Luzon Group, now focusing on managing and recovering existing loans. Earlier, eLoan was acquired by Meitav and ceased operations in 2022, writing off significant debts for delinquent creditors. Currently, the consumer and business P2P market relies mainly on a few firms like BTB, which focuses on small and medium business credit, and Spark by Ogen.
The Capital Market Authority emphasized that licensed credit intermediaries manage client funds but do not bear credit risk themselves, necessitating protection for both borrowers and lenders. The directive highlights transparency in portfolio performance, requiring disclosure of net returns, fees charged, and the average duration from withdrawal request to actual payout, a critical pain point for investors in recent years.
Beyond enhanced direct supervision, the Authority intends to use the collected data to establish a "common language" among financial regulators, following recommendations from the Shtrum Committee, to enable comprehensive analysis of credit volumes and costs in the economy. Amit Gal, the Capital Market Authority Commissioner, stated, "These supervisory measures deepen ongoing oversight and ensure orderly, tailored risk management. The Authority's role is to protect both borrowers and lenders while maintaining competition in credit and investment sectors. Combining continuous automated reporting with internal controls will ensure proper management and safeguard clients' long-term interests."
