The Financial Conduct Authority is seeking input on an upcoming review of crowdfunding.
The method is regularly used by proptech firms and online agents – both easyProperty and eMoov have used it, raising £1.3m and £2.5m respectively.
In 2015 an estimated £2.7bn was invested on regulated crowdfunding platforms, up from £500m in 2013.
The FCA introduced rules for the regulation of crowdfunding platforms in March 2014 and committed at the time to a full review of their impact.
Christopher Woolard, director of strategy and competition at the FCA, said: “Since then the market has grown rapidly and we want to explore concerns that have been expressed about developments in some aspects of the market.
“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.”
In its call for input the FCA is seeking views on a number of issues, including due diligence, and whether those seeking crowdfunding should be required to give more information.
The call for input also signals the FCA’s intention to consult on applying the usual mortgage lending standards to peer-to-peer platforms in order to give consumers the full benefit of these protections.
The full call for input can be found here.
Comments (2)
The crowdfunding model becomes a self fulfilling Ponzi. The company can only stay in business as long it receives a new round of crowdfunding. Or if they make a profit and become cash positive. ( Good luck with that one). Therefore it effectively relies upon new investors cash to keep old investors sweet. That has Ponzi written all over it.Just a more subtle version.
I always said the regulator would catch up with the scam that some offer. About time, some are nothing more than a confidence trick, solely to line the pockets of directors until it collapses. Maybe they will also look at why a company in debit is valued at £m’s with no assets or assets protection for investors. Profit & loss should be made public on a monthly basis at least.