The launch of the organisation, founded by Prosper, Funding Circle and Lending Club last month, was seen by industry observers as a step forward for marketplace lending.
Indeed, as the first industry body dedicated to promoting transparency and best practices in P2P lending, the launch of the MLA received a strong audience reception when Renaud Laplanche, former chief executive of Lending Club, discussed it in his keynote address at the LendIt conference in April.
However, Laplanche’s subsequent departure has now led some to question the future of the group, which is meant to act as a “thought partner” to the appropriate regulatory bodies in Washington, DC.
“The Lending Club saga has been a setback for the MLA. The reality is that Lending Club has bigger problems than getting the MLA off the ground,” a person with knowledge of the matter told GlobalCapital. “Their whole focus right now is getting investors on board. Once they’ve gotten past this problem, then they may look at other initiatives.”
A second person with knowledge of the matter also pointed out the lack of industry coordination among the founding members, given the outstanding internal problems that Lending Club and Prosper have been dealing with.
According to published reports, Prosper has faced capital markets issues stemming from sluggish loan sales over the past few months. Earlier this month, the company let go of 28% of its staff, in addition to shuttering its Utah office. The platform also parted ways with Citi in April, after recent securitizations failed to perform in line with expectations.
“[These] problems are not going to go away… Whatever the MLA has already planned is certainly going to happen on a delayed timeline,” the first source said.
When reached for comment, a spokesperson for the MLA informed GlobalCapital that the group is still looking to hire an executive director for its office in DC, but declined to give a timeline or comment on specifics.
“The MLA is continuing to actively recruit an executive director to oversee the strategic direction and day-to-day operations of the association,” said the spokesperson. “Once appointed, the executive director will work with the board to develop the membership process, finalise the association’s governance framework, and establish a DC office.”