THE Financial Conduct Authority (FCA), the City watchdog, will push to regulate online crowdfunding sites next year amid concerns about customer safeguards in the fast growing sector.
Crowdfunding websites allow businesses to tap people for small investments in standalone projects.
Investors who use sites regulated by the FCA are protected by a host of regulations to protect their cash. Sites such as those in the United States that are not regulated offer no protection for consumers.
“We want it to be clear that investors in the majority of crowdfunds have little or no protection if the business or project fails,” an FCA spokesman said.
The FCA’s move was first reported by the Sunday Times yesterday.
It is expected that the FCA’s plans to oversee the sector will be formalised in February next year.