Complaint Mechanism in Peer-to-Peer Lending: A Comprehensive Guide

Complaints in P2P lending can arise from various issues, including:

• Loan Defaults

  Borrowers failing to repay loans on time.

• Diversification

  Disagreements over fees or interest rates.

• Miscommunication

  Lack of clarity or misinformation about loan and lending terms.

• Data Privacy

  Concerns about personal and financial information security.

• Cheque Issues

  Cheque not presented or done with delay.

• Lack of Disclosure

  Not conveyed the amount of loan sanctioned, terms & conditions, annualised rate of interest, etc.

• Lack of Notification

  Notice not provided for changes in agreement, levy of charges.

• Transparency Concerns

  Failure to ensure transparency in contract/loan agreement.

• Delay in Documentation

  Failure/delay in releasing securities/documents.

• Repossession Issues

  Failure to provide legally enforceable built-in repossession in contract/loan agreement.

• Non-Compliance

  RBI directives not followed by NBFC.Guidelines on Fair Practices Code not followed.

The complaint-handling process in P2P lending typically involves several steps:

• Submission of Complaint

  The first step is for the aggrieved party to submit a complaint. Most P2P lending platforms provide multiple channels for this, including online forms, email, and customer service hotlines. The complaint submission should include details such as the nature of the issue, relevant transaction IDs, and any supporting documents.

• Acknowledgment of Complaint

  Upon receiving a complaint, the platform should promptly acknowledge it. This acknowledgment serves as confirmation that the complaint has been received and will be addressed. It also typically includes a reference number for tracking the complaint's progress.

• Initial Review and Assessment

  The platform's complaint-handling team conducts an initial review to assess the complaint's validity and complexity. Simple issues may be resolved quickly, while more complex cases may require a detailed investigation.

• Investigation

  An in-depth investigation is conducted to gather all the necessary information and understand the root cause of the problem. This may involve reviewing transaction records, communication logs, and any other relevant data. The investigation should be thorough and impartial to ensure a fair resolution

• Resolution and Response

  After completing the investigation, the platform formulates a resolution. This could range from reversing disputed charges, adjusting loan terms, providing additional information, or implementing technical fixes. The resolution is then communicated to the complainant, along with a detailed explanation of the findings and actions taken.

• Escalation and Appeals

  If the complainant is not satisfied with the resolution, they should have the option to escalate the issue to a higher authority within the platform. Additionally, platforms may offer an appeals process where the case is reviewed by an independent or senior team.

• Closure

  Once a resolution is accepted by the complainant, the case is closed. The platform should document the entire process for future reference and compliance purposes. Feedback from the complainant can also be gathered to improve the complaint-handling process.

What if the NBFC does not resolve the complaint?

If a complaint against an NBFC in the P2P lending space is not resolved satisfactorily, there are further steps that can be taken to seek resolution.

If the NBFC does not resolve the complaint within one month, the complainant can escalate the matter to the NBFC Ombudsman. The Ombudsman will then attempt to reach a settlement or may issue an award based on the merits of the case.

If the complainant remains dissatisfied with the decision of the Ombudsman, they have the option to approach the Deputy Governor of the Reserve Bank of India (RBI) for further review.

Additionally, the complainant retains the right to seek legal recourse by approaching any court at any point if they feel their complaint has not been adequately addressed. These avenues ensure that individuals have mechanisms in place to seek redressal if they encounter issues with NBFCs in the P2P lending sector.

Regulation plays a vital role in ensuring that P2P lending platforms maintain fair and transparent complaint mechanisms. Regulatory bodies in various jurisdictions have established guidelines that P2P lending platforms must follow. These regulations often include:

• Timely Response

  Requirements for timely acknowledgment and resolution of complaints.

• Transparency

  Mandates for clear communication about complaint procedures and resolutions.

• Record Keeping

  Obligations to maintain detailed records of all complaints and their resolutions.

• Independent Review

  Provisions for an independent or third-party review of unresolved complaints.

In many countries, regulatory bodies such as the Financial Conduct Authority (FCA) in the UK, the Securities and Exchange Commission (SEC) in the US, and the Reserve Bank of India (RBI) oversee P2P lending platforms and ensure compliance with these regulations.