Austrian Chamber of Labour Report on Crowdfunding

AK-Wien-LogoThe Chamber of Labour in Austria (AK) strives to represent the interests of 3.4 million employees and consumers in the country.  Basically the organization focuses on social and economic policy and engages in political discourse to advocate on behalf of their constituents.

The below document falls under the category of “recently found” as it was originally published in April of 2014.

The most interesting portions of the report has to do with “Demands made by AK from the perspective of consumers”, representing one industry perspective.

They include:

  • Clarify terms and definitions, particularly on crowdfunding categories (crowd lending, crowd investing, etc.). Clarify the terms “platform” and “portal”, which might suggest, for example, that myriad projects are involved and independence prevails (in intermediary services).
  • Set formal requirements on content and structure for the crowdfunding websites (Website Information/Disclaimer, terms and conditions of business, rights of withdrawal, risk notices, duration, number of projects, etc.) to ensure cross-border standards for information. Crowdfunding websites in England lack a “Website Information/Disclaimer” section altogether.
  • Implement mandatory and clearly visible risk notices for each type of project (traffic light as a striking information instrument for the Internet) regardless of whether donations, investing or lending is involved.
  • Distinguish clearly between donations), investing (monetary investment, participation) and lending (credit facilities, loans) and impose defined, non- product-specific duties to provide consumers with information (in the form of a product information sheet). A higher level of protection should be ensured for platforms appealing to the wider investing public to lend and invest than for platforms involved (solely) in the collection of donations.
  • Distinguish clearly between product intermediation (for lending and investing.) for investors and advisory activity for companies or capital recipients (to avoid conflicts of interest).
  • Ensure that the activities of platform operators satisfy the licence obligations for credit and securities transactions and/or requirements under trade law for intermediary services for investments.
  • Regulate credit transactions strictly: Austria prohibited bankless-life.at from conducting business, thereby clearly drawing the line at non-regulated credit transactions.
  • Obligate crowdfunding platforms to be registered by the supervisory authorities and to be published in a public register.
  • Ensure consumer rights especially the right to withdraw from distance selling agreements (credit, securities purchase, participations)
  • The platform operations themselves are obligated to examine projects and subject them to logical examination criteria.
  • Do not soften licence obligation by modifying deposits business in the Banking Act
  • Refrain from further weakening of prospectus law

The document in its entirety is embedded below.

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