The Financial Conduct Authority (FCA) is to regulate crowdfunding and peer-to-peer financing early next year.
The FCA is the regulatory authority that oversees financial firms providing services to consumers and is the replacement body to the Financial Services Authority.
The new regulator has published a consultation paper outlining its intended restrictions on traditional crowdfunding methods.
It means products listed on crowdfunding websites may find it harder to source finance.
Proposals include firms forced to disclose any potential risks and restricting sales to ‘sophisticated’ investors.
It also intends on imposing restrictions ensuring they do not invest more than 10% of their portfolio.
The regulations will affect anyone wishing to invest using crowdfunding or anyone hoping to list on a platform.
I don’t agree that participation in equity crowdfunding, and the fantastic tax breaks that go with it, should be limited to high net worth or sophisticated investors and as far as limiting the amount that can be invested, this is more than a little patronising to investors who can demonstrate that they know what they’re doing but just don’t happen to be rich.
Why not leave well alone!
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