Friday, July 08, 2016 11.56AM / News
The Financial Conduct Authority (FCA) is seeking input on which areas should be considered as part of its upcoming review of the rules surrounding both investment-based and loan-based crowdfunding.
In 2015 an estimated £2.7billion was invested on regulated crowdfunding platforms, up from £500 million in 2013, with more than 100 platforms either operating in the market or seeking authorisation. 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:
'The crowdfunding market is an innovative and growing sector and one which we see as part of promoting effective competition. We introduced rules in 2014 to ensure consumers were protected without preventing the market from enhancing competition through expansion and innovation.
'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 related to loan-based crowdfunding including:
We are also interested in comments on the effect on competition of the growth of crowd funding.
The FCA is also seeking views on its regulation of investment -based crowdfunding including:
The call for input also signals the FCA’s intention to consult on applying the usual mortgage lending standards to Peer-to-Peer (P2P) platforms in order to give consumers the full benefit of these protections.
The FCA is asking for responses to its Call for Input by 8 September 2016.
2. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the PRA. On 1 April 2014, the FCA took over responsibility for consumer credit regulation.
3. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
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