FCA tackles crowdfunding

In publishing CP13/131, the Financial Conduct Authority (FCA) sets out a proposal for the regulation of crowdfunding, covering both peer-to-peer (P2P) lending and investment-based crowdfunding platforms (CFPs).

The FCA’s proposals represent the first real attempt in the UK to consolidate and regularise how innovative crowdfunding platforms designed to ‘democratise’ finance should be supervised. The FCA proposals are underpinned by four key assumptions that may sound obvious but have not been universally accepted.

Crowdfunding platforms that have an investment aspect to them (as opposed to platforms merely focused on donations or non-investment project sponsorship) are already highly likely to need a licence. Peer-to-peer lending platforms are not comprehensively regulated under the existing Consumer Credit Act regime but shortly the FCA will regulate a new activity of ‘operating an electronic system in relation to lending’…

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