In this Call for Input, we set out the current regulatory framework using video and interactive graphics, and are seeking views on the impact of regulation on social investments with a set of questions for social enterprises, firms who want to market social investments, and investors (and investor groups) who are interested in these investments.
Call for Input: Regulatory Barriers to Social Investments[1] [PDF]
Why are we publishing this Call for Inputs?
Social investments aim to provide a wider social benefit than an investment where the primary purpose is a purely financial benefit. They are different from donations; the donor does not expect to get any money back. Social investors generally either expect to get back their initial investment or expect the organisation to use the investment for its work and provide a return to investors where it can. Following the publication of our approach to regulating crowdfunding, the social investment sector raised concerns about the impact on the growth of their sector, as they often rely on crowdfunding for capital. This Call for Input allows the sector to comment in more detail about the potential regulatory barriers.
In this Call for Input we:
- Explain the different structures a social enterprise in the UK can have and how our rules may apply.
- Ask for views about specific rules and policies which may be hindering investment for social purposes.
- Consider the appropriate protection for retail investors as it is important they appreciate the risks associated with these types of investments as they are likely to be less familiar with these products.
The Current Regulatory Framework
Our aim is to clarify how and when our rules apply to social enterprises and retail investors. The video below will show you how to use the interactive graphics we have prepared to explain the journey a social enterprise might take, and conversely, the journey of a social investor.
Looking to form a social enterprise?
Explore our interactive graphics to see the steps and considerations for forming a social enterprise.
Forming a social enterprise (print version)[2] [PDF]
Looking to invest in a social enterprise?
Explore our interactive graphics to see the steps and considerations if you are looking to invest in a social enterprise.
Investing in a social enterprise (print version)[3] [PDF]
Next steps: your feedback
We are interested in hearing feedback from social enterprises and those firms, such as financial adviser and crowdfunding platforms, who may market these investments to potential investors.
We are interested in views about the potential risks to consumers investing in this sector as it is important investors are making informed decisions and understand the risks associated with social investments.
We are also interested in evidence about consumer demand for these investments, particularly which groups of consumers are making these types of investments.
Please send your comments to us using our online form[4] by 14 March 2016.
Find out more
- CP13/13: The FCA’s regulatory approach to crowdfunding (and similar activities)[5]
- PS14/4: The FCA’s regulatory approach to crowdfunding over the internet, and the promotion of non-readily realisable securities by other media[6]