UKCFA responds to the FCA’s feedback statement relating to their review of the rules for Crowdfunding

Today the FCA published its interim feedback to the call for input to the post-implementation review of the FCA’s crowdfunding rules in Feedback Statement (FS16/13).

Overall the UK Crowdfunding Association believes that the issues raised in the FCA’s interim feedback statement are a question of better enforcement of existing rules by the regulator, as opposed to the creation of new rules. The UK’s approach to the regulation of crowdfunding is widely admired around the world and we want to maintain our leadership position globally in shaping the future of this important and growing part of the financial services industry.

The feedback statement is the next step in the FCA’s planned post-implementation review, which covers the regulation of both loan (P2P) and investment crowdfunding. We have long been advocating for clarification of the rules defining loan crowdfunding so look forward to working with the FCA on refining those rules while being mindful of the need to balance the need to promote competition and ensure investor protections are proportionate to the risks. However, we feel the FCA should acknowledge the success of the existing rules in investment crowdfunding both in ensuring investors understand the risks and the way new investors are given additional protections through the appropriateness test and restricted retail investor status compared to traditional models of retail investment.

Our experience on the ground suggests that our approach to investor protection is one that the wider financial services industry as a whole could learn from. Rather than seeing crowdfunding as the ‘new kids on the block’ we believe we can teach the old dogs from the traditional sectors some new tricks in the way they educate and inform their investors. We look forward to working constructively with the regulator to find ways to make sure best practices are spread more widely across the sector and we continue the process of innovating the way businesses raise money and ordinary people invest for their future.