Now that the UK market is more established and crowdfunding has become a more accepted form of raising capital, the Financial Conduct Authority (FCA) has published a research report to consider whether there needs to be changes to reflect:
- its current scale and status,
- the risks to investors and,
- whether the current regime is adequate.
“We believe now is the right time to consider whether our requirements remain appropriate and that we have the right rules to support the development of this dynamic market by ensuring consumers are adequately protected,” said Christopher Woolard, director of strategy and competition at the FCA.
The FCA addresses potential concerns about some areas of the market and will look to ensure that consumers are sufficiently protected against the risks inherent in crowdfunding whilst supporting fintech innovation.
Going forward, the regulator has advised that it may require platforms to change the way that fundraising campaigns are displayed by requiring businesses to only display money that has been contributed by “persons unconnected with the business.” Due to fear that other forms of reporting may generate a counterfeit kind of momentum for campaigns.
A Welcome Development In The Crowdfunding Industry
ShareIn has always been a strong advocate for financial regulation and ensuring that Investors are treated fairly. We take our responsibilities very seriously and feel that appropriate regulation is key in this industry.
The crowdfunding & fintech environment is constantly evolving. Confidence is essential to everyone involved in the industry and the FCA’s research paper is to be welcomed.
Those interested in submitting there feedback are invited to by 8 September 2016. Here is a sample of questions posted by the review:
- Do you consider that there is the potential for regulatory arbitrage with banking business? If so, what measures should be considered to address it?
- Do you have any concerns about, or evidence of, differences in the treatment between retail and institutional investors?
- Have you seen any initial evidence that the ISA wrapper has led to consumers not fully appreciating the risks involved in Innovative Finance ISA investments?
- Are there differences in borrower protection between commercial and non-commercial agreements that would be best addressed by applying additional rules to P2P platforms, or are the existing rules adequate?
You can access the full review here.