Some of the largest online lenders have formed a new trade group to represent the industry as it comes under increased regulatory scrutiny.

The Marketplace Lending Association is a nonprofit organization "created to promote responsible business practices and sound public policy to benefit borrowers and investors," according to a news release.

MLA's founding members are LendingClub, Prosper Marketplace and the U.K.-based Funding Circle. One of the association's first actions was to establish a code of business conduct addressing transparency for investors and responsible lending practices.

MLA plans to hire an executive director and staff, but so far no staff announcements have been made.

Online lending is a new, fast-growing industry. One research firm, Autonomous Research, estimated online lenders could provide as much as 10 percent of all loans by 2020. The industry was practically non-existent before 2010, but now there are more than 200 online lenders in the U.S. alone. http://bit.ly/1q9lH1C

"In the fast-growing marketplace lending sector, we want to continue to act as a thought leader and thought partner to the appropriate bodies in Washington to ensure continued innovation and responsible growth in the sector," Funding Circle co-founder and Managing Director Sam Hodges said in a statement.

The industry's rapid growth has attracted scrutiny by regulators and trade groups representing traditional banks. The Consumer Bankers Association and American Bankers Association issued a joint letter to the U.S. Department of Treasury in September 2015 noting that, while its members have embraced online lending, they believe all lenders need to play by the same rules.

"Simply put, consumers should receive the same protections whether they borrow from a bank or a nonbank marketplace lender," the associations said. "Any activities that involve lending or securitization should be subject to the same regulation, whether offered by a bank or a nonbank."

The online lending sector is already represented by the $4 million-revenue Online Lenders Alliance, which doesn't list its members on its website.

In addition, three small business trade groups—the National Federation of Independent Business, National Small Business Association and Small Business and Entrepreneurship Council—recently announced the launch of the Coalition for Responsible Business Finance to advocate for policies encouraging the growth of the online lending sector. The groups say such lenders are needed because small businesses are increasingly being denied loans from banks and other traditional lenders.

MLA's website is www.marketplacelendingassociation.org.

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