Yet Another Association for Marketplace Lending Launches

canstockphoto7572151That’s what the industry needs: competing marketplace lending associations.

Today, the three big names in marketplace lending (for now — more on that below) that were not in the just-launched Marketplace Lending Association have formed the Innovative Lending Platform Association.

This is Funding Circle, Lending Club and Prosper Marketplace of the Marketplace Lending Association vs. OnDeck, Kabbage and CAN Capital of the Innovative Lending Platform Association.

The former “will advance the marketplace lending industry,” while the latter “is focused on advancing small business online lending education, advocacy, and best practices.” It is unclear whether there will be a subsequent back-alley rumble.

In all seriousness, this is a poor turn of events for fintech. Nothing beneficial comes from a discordant industry, even if superficially the argument will be that the Marketplace Lending Association will have a consumer credit bent, as opposed to Innovative Lending Platform Association’s lean toward small business lending. That the two associations were launched exactly one month apart evidences either insufferable egos or an inability to simply play nice.

It should be added that these association are popping up because of a simple truth: the Consumer Financial Protection Bureau is coming. Last March, the CFPB began accepting complaints on marketplace lending, and a handful of submissions have been made. For example, nine complaints have been filed against Prosper. In at least one case, Prosper was forced to remit a fee it had charged on a loan made to a borrower in Georgia.

Despite these developments, new questions have surfaced regarding the overall viability of the marketplace lending model. OnDeck, for example, disclosed this week that it was markedly reducing its marketplace lending operation in favor of traditionally funded commercial finance, which is, it should be noted, already heavily regulated.

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