The Financial Conduct Authority has closed the comment period regarding its request for feedback regarding post-implementation review of FCA crowdfunding rules. The initiative covers debt, equity and other securities. The forthcoming publication reviewing existing rules will incorporate the perspective of platforms, consumers and competitors to alternative finance providers. The FCA originally outlined who the paper will be of interest to:
- consumers and consumer organisations with an interest in the investments offered on crowdfunding platforms, and similar investment offers such as the marketing of mini-bonds
- firms that operate or plan to operate peer-to-peer (P2P) lending platforms or peer-to-business (P2B) lending platforms (which we refer to as loan-based crowdfunding platforms in this paper) on which consumers can invest in loan agreements (which we refer to as P2P agreements)
- firms that operate or plan to operate investment-based crowdfunding platforms on which consumers can buy investments, such as equity or debt securities (such as bonds or debentures) that are not listed or traded on a recognised exchange, or units in an unregulated collective investment scheme
- firms that market non-readily realisable equity or debt securities to retail clients outside of online investment crowdfunding platforms
- firms that compete for business with P2P lenders
- consumers and businesses that have entered into, or plan to enter into, P2P agreements as borrowers
Dr Louise Beaumont, Head of Public Affairs & Marketing at GLI Finance, commented on the FCA process;
“Our response is driven by our desire to see the success of the alternative finance market as it pertains to SMEs – often called the engine room of the UK economy. The ability of alternative finance to address the nagging access to finance gap is widely recognised. We must work towards a regulatory environment that helps rather than hinders alternative finance as a solution.”
“We also understand the difficult task that any regulatory body faces in keeping track with the pace of innovation. The future of the financial sector is increasingly technological, rather than manual, and the FCA needs to ensure it has sufficient expertise and resource to adapt to this new world.”
Beaumont expressed her interest that policy shifts away from the myopic approach that more rules are always the solution.
“We hope that through this review, the emphasis shifts from “more regulation” being the answer, to seeking “better regulation” instead. Additionally, effective enforcement of regulation is vital if the sector is to achieve its potential and the benefit the economy as a whole.
Beaumont stated that GLI Finance looks forward to engaging with the FCA and welcomes its commitment to support the growth of the sector.
The final report from the FCA is expected in the coming months.
The original call for input is reposted below.
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