With the Financial Conduct Authority (FCA) consultation period scheduled to end shortly, CrowdConsent is announcing a simple technology solution to address current proposals to regulate both equity and debt based crowdfunding.
The CrowdConsent service allows platforms to demonstrate that they have obtained the informed consent of crowdfunders in a way that is independently verified. This solution has been welcomed by multiple industry leaders and platform owners who believe that crowdfunding should be open to all and regulations, as currently proposed by the FCA, would exclude the majority of “the crowd” from crowdfunding.
Barry James, designer of CrowdConsent and founding director of the Social Foundation and TheCrowdfundingCentre, has created this technology to provide what could be a new industry standard to ensure a higher level of confidence than ever before that the appropriate consent has been consciously and actively given and precisely recorded – but with the minimum of friction and fuss for both the user and the platform.
“What this does is ‘place the onus on consumers to take responsibility for their actions and investment decisions’ in full accord with the principles the FCA has laid out* avoiding any need for increasingly complicated and restrictive ‘nanny’ measures to protect people from themselves.
“This makes redundant any need for the FCA’s 10%-of-portfolio rule and so removes the need to exclude ordinary people (‘non-sophisticated’ investors) access to equity crowdfunds. Under this problematic rule people would be restricted to investing less than 10% of their ‘investible portfolio’ – which sounds fine until you realise that only a tiny proportion (who are in any case sophisticated investors) maintain such a portfolio. They freely choose to make small investments and contributions from disposable income or savings.”
“The CrowdConsent service makes it safe for them to do so with the full assurance that they are fully informed of the possible outcome that they may lose that investment – and should only make it in full knowledge of this.”
Mark Thackeray Founder / Director of EcoPropagator.com said:
“Crowdfunding provides an opportunity for members of the wider community to support the growth of companies by risking small amounts. The beauty of this innovative approach is that it provides proof positive that warnings have been presented and actively acknowledged removing the fear that people may be unaware of the risk and so any need to exclude people – crucially helping to keep the crowd in crowdfunding.”
Karen Darby, Founder and CEO of CrowdMission, said:
“At last a simple and effective way to keep crowdfunding inclusive. I hope the legislators take heed, if they don’t then I would question their motives.
“Whether you are an investor or an entrepreneur looking to launch a pitch on CrowdMission we insist that all of our members sign up to our Social Investment Values that emphatically preserve the rights of the individual to invest in mission-driven businesses.”
Stephen Hazell-Smith, an architect of the AIM market and founding chair of the Plus Market who has 30 years experience of investing in small companies says:
“The regulator is always concerned that there is no proof that investors have read the risk warnings. CrowdConsent puts that concern to rest.”
“For other platforms, such as rewards and donation based which aren’t yet subject to FCA regulation, CrowdConsent provides the means to record active, traceable, consent to allay concerns regarding higher value transactions – something already considered desirable by the leading platforms taking these issues most seriously – and which may soon become essential for all.
“For the geeks among us, the service provides for both fixed and flexible messages to be fully recorded, so is flexible enough to adapt and change with evolving requirements.”
CrowdConsent is configured to accomplish the regulatory requirements by:
- At the appropriate place in the transaction ( just before the user commits to making an investment) an unavoidable window appears with the appropriate message, such as the following:
“Please confirm you understand that if you proceed you may lose all or part of this investment. If you understand and agree to this, record your consent by entering this code below: XYZ123456.”
Entering the unique code into the box provided (in this case XYZ123456) ensures consent is conscious and active and enables recording and tracking of the consent given (by whom, when and where). Highly secure cryptographic techniques ensure that privacy is fully preserved while information on the consent-event and message are recorded centrally beyond the control of the platform and therefore beyond reproach.
The facilities provide (via a free, open source, SDK) the means for any competent web developer to implement this quickly and easily so that it can easily be grafted into existing and new platforms with the minimum of fuss.
CrowdConsent is also supported by The Open Crowds Innovation Alliance which brings together those interested in open crowdfunding and other crowd centred innovations and in ensuring they stay open to all and embody the same spirit to be, and remain, by default – open, supportive and inclusive.