Britain’s financial watchdog has written to the chief executives of peer-to-peer loan companies to warn them against the practice of lending to other lenders.

In the latest sign of the growing complexity of the sector, the Financial Conduct Authority said businesses borrowing money and lending it out must have permission to “accept deposits” – a feature of banking.

The FCA recently signalled plans to impose tougher rules on the sector, warning that it was “testing the boundaries” of what crowdfunding regulations allow.

The watchdog also said it would look into the “risk of regulatory arbitrage” with banks.

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