City watchdog outlines new rules to govern crowdfunding firms
THE FINANCIAL Conduct Authority (FCA) yesterday confirmed new rules for crowdfunding which, it says, will help protect consumers.
Its aim is to give people access to “fair, clear information” when using loan-based or securities-based crowd funding platforms.
A total of £28m was raised through crowdfunding last year – a 600 per cent increase from 2012. The FCA already regulates securities-based funding, which allows people to buy shares or debt securities in a company.
The new rules will require firms to have ways for loan repayments to continue to be collected even if the online platform gets into difficulties, keep capital buffers to help withstand financial shocks, and provide the same level of protection to investors whether they engage with firms online, or offline.
They also say investors should have access to clear information to help assess the risk and understand who will ultimately borrow the money.