[Newsletter n. 3]

 

On 19 November 2015, the Bank of Italy launched a public consultation on the draft amendments to the Bank of Italy Supervisory Rules (Title IX, Chapter 2) (“Rules”) concerning the regime of collection of savings by non-banks.

The main purpose of such amendments is to enhance the level of savers’ protection set out by the current regulation in connection with lending activity from the public to non-banks.

The main areas of intervention concern: (i) the collection of savings by financial and non-financial institutions through bonds and other financial instruments; (ii) the funding of cooperatives from its own shareholders; (iii) the social lending.

Note:

Social Lending. This consultation introduces the notion of social lending into the Italian legislative framework, reflecting the increased attention at European level on such financing tool as an alternative to straight banking activity (in light of the implicit risk of fostering the growth of shadow banking).

The social lending is defined as the use of online platforms to collect repayable funds (bearing interests) from potential lenders for personal or business use.

According to the draft rules, a new section dedicated to social lending is added to the Rules, setting out the conditions and limits that platform’s managers and borrowers shall comply with, in order to carry out such lending activity without breaching the applicable regulation on public saving collection.

In particular:

(a) the collection of savings in connection with the provision of payment services or issuance of electronic money is allowed to managers (of on-line platforms) as long as they are authorized to such activity;

(b) fund raising is permitted to the borrower to the extent that it is carried out on the basis of individual negotiation. In this respect, individual negotiation is deemed to occur when borrowers and lenders are able to alter the contractual provisions according to their determination and the platform’s manager is only providing technical support to allow the negotiation.

In order to prevent non-banks from borrowing money in large amounts from the public, a maximum threshold is deemed necessary (such limit should be set out at a later stage by the Bank of Italy).

Credit institutions are entitled to carry out social lending with no restrictions.

The social-lending model is a form of crowdfunding and it provides the possibility of peer-to-peer lending between private individuals and small companies, as an alternative to the traditional banking channel, which has become hardly accessible when borrowing small amounts. In recent years, such financing tool has struggled to take off in Italy due to the resistance of the traditional banking system and the inadequacy of the existing digital infrastructure. However, the current consultation confirms the relevance that such phenomenon is gaining in the Italian financial industry today, with potential benefits also for credit institutions.

The text of the Consultation Paper and the Draft Rules are available, in Italian only, at the following links: http://goo.gl/d9GLg4 – http://goo.gl/pLZ6Ok

Comments to the Consultation Paper can be submitted by 18 January 2016 (60 days as from 19 November 2015).

Please do not hesitate to contact us should you need any assistance in submitting your response or any further clarification on the discussion paper.

 

Contacts:

Vito Vittore
Senior Partner

Elena Pagnoni
Of counsel

Greta Caterina Carriero
Associate