Internal Committees and Proportionate Risk Management in P2P Lending
Introduction
Welcome to Lesson 3.2: "Internal Committees and Proportionate Risk Management in P2P Lending." In this lesson, we will explore the internal committees involved in risk management and oversight within rebuildingsociety.com. We will also discuss the proportionate approach to risk management suitable for a small business and relevant FCA Handbook references that guide these practices.
Learning Objectives
- Understand the role of internal committees in risk management and oversight.
- Learn about the Risk and Compliance Committee (RCC), Credit Risk Committee (CRC), and Finance Committee.
- Recognise the importance of proportionate risk management and monitoring for a small business.
- Identify relevant FCA Handbook references related to risk management for P2P platforms.
1. Role of Internal Committees
Internal committees are essential for effective risk management and oversight within a P2P lending platform. These committees ensure that the business adheres to regulatory requirements, manages risks appropriately, and operates efficiently.
Key Internal Committees:
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Risk and Compliance Committee (RCC):
- Responsible for overseeing the overall risk management framework and ensuring compliance with regulatory requirements.
- Monitors the effectiveness of internal controls and compliance programs.
- Reviews and approves risk management policies and procedures.
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Credit Risk Committee (CRC):
- Focuses on the assessment and management of credit risk associated with business borrowers.
- Reviews and approves credit risk policies, including borrower eligibility criteria and credit assessment processes.
- Monitors the performance of the loan portfolio and makes recommendations for risk mitigation.
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Finance Committee:
- Oversees the financial management and performance of the platform.
- Reviews financial reports, budgets, and forecasts.
- Ensures that the platform maintains adequate financial resources and adheres to financial regulations.
Each committee has its own Terms of Reference, which outline its purpose, membership, meeting frequency, and specific responsibilities.
RCC - Terms of Reference
CRC - Terms of Reference
Finance Committee - Terms of Reference