An earlier version of this article was erroneously titled ‘Prosper float postponed on regulator queries’. We apologise for any confusion.
On May 23rd we shared with you the news two fintechs would be hitting the listing boards in June – Raiz and Prospa. The news was a sign to many that fintech was not only a thriving, but a maturing ecosystem.
However in an announcement that sent reverberations through the banking and fintech community today, Prospa’s float, due to go live today, was postponed 15 minutes before listing, due to inquiries from the regulator. According to a statement released via the ASX, the industry watchdog, ASIC, is seeking clarification on a number of queries related to Prospa’s small business loan terms. The questions are being made in the context of an industry wide review into financial services small business loan terms.
Prospa’s prospectus stated a weighted average APR (on a gross loan basis) on the portfolio of 41.3%, at December 2017.
While it is not clear from the statement if the halt to the listing was Prospa driven or ASIC requested, provided the fintech float hopeful can satisfactorily clarify ASIC’s queries, it is safe to assume the listing will be back on. Every signal from Prospa and reported media indicates that will be the case. Regulator scrutiny is part and parcel of financial services, and par for the course in many respects, so those familiar with this world won’t be overly shaken.
But in the halo of the Royal Commission, this move by ASIC, at the eleventh hour, sends a rather strong signal to the entire investor and fintech community that the regulator is intent on asking more questions across the spectrum of financial services, startups and high growth ventures included. This is despite the inordinate amount of time they need to spend dealing with incumbents. This week Australia’s biggest bank landed the biggest fine in Australian corporate history. Commonwealth Bank has agreed to pay $700 million plus legal costs for breaches of AML and CTF laws.
My takeaway – there are no free lunches in financial services, startups included, and governance ‘stock’ is definitely trending upwards.
Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.