UK regulator clamps down on crowdfunding
The UK’s Financial Conduct Authority (FCA) is rocking the tough guy look as it clamps down on loan-based crowdfunding platforms.
As it chews a cocktail stick, the leather jacket-wearing FCA has unveiled a consultation on new rules following a post-implementation review of its crowdfunding rules.
It’s probably about time as it last reviewed the sector in December 2016. The FCA says it has observed the variety of loan-based crowdfunding business models, some of which have become increasingly complex.
Based on its findings, the knuckleduster-equipped FCA is now inviting responses to several specific proposals to change the rules for loan-based firms.
This includes investors get clear and accurate information about a potential investment and understand the risks involved; transparent and robust systems for assessing the risk; and the promotion of good governance and orderly business practices. AKA – the usual stuff the FCA comes out with it.
Christopher Woolard, executive director of strategy and competition at the FCA, says: “The changes we’re proposing are about ensuring sustainable development of the market and appropriate consumer protections.”
In its December 2016 statement, the FCA also committed to addressing a potential gap in protections for customers buying a mortgage or taking out a home finance product through loan-based crowdfunding.
It is now proposing to apply rules which would normally apply to home finance providers, to P2P platforms where at least one of the investors is not an authorised home finance provider.
The FCA has also observed “some poor practice by some firms in the crowdfunding sector, particularly among loan-based platforms”. As you’d expect, it wants everyone to get better.
The regulator is asking for feedback by 27 October 2018. You can do that here.
Earlier this month, the Bank of England, Prudential Regulation Authority (PRA) and FCA were calling on banks and firms to up their A-game and give feedback on operational resilience.