FCA calls for views on social investments

The Financial Conduct Authority (FCA) is calling for contributions on how regulation is working in relation to the social investment market.

Social investment is a term used to describe investments where the aim is to provide a wider social benefit, rather than the primary driver being a purely financial benefit to investors.

Christopher Woolard, director of strategy and competition at the FCA, said:

"The social investment market is developing quickly and regulation needs to keep pace. We want to explore the impact of our regulation to ensure it isn’t inappropriately restricting growth but continues to protect investors."

The FCA is publishing a wide-ranging call for input asking for social entrepreneurs’ experience of raising capital. In addition, the FCA is seeking input from financial advisors recommending social investments, views about the potential risks to consumers investing in this sector and we also welcome views from individual consumers.

Following the call for input, the FCA will consider whether it is necessary to clarify the requirements that apply to social entrepreneurs and the protection available to consumers for social investments. 

The FCA asks for comments on this paper by 14 March 2016.

Notes for editors

1. Discussion paper: Regulatory Barriers to Social Investments[1].
2. Presentations for social entrepreneurs
   1. Where should I register?
   2. How can I raise the capital
   3. How can I reach retail investors?
3. Presentations for retail investors
   1. What can I invest in?
   2. How can I invest?
   3. How is my investment protected?
4. Many social enterprises are regulated, as shares in a company, debt securities, and units in collective investment schemes are all classified as ‘specified investments’. In general, these firms need to be authorised, have their promotions approved by an authorised firm, or ensure an exemption is available before they can lawfully promote their investments.
5. Additionally, the legal structure of a social enterprise may also affect the forms of finance they can use, how they can come within our scope and what exemptions to this are available.
6. Policy statement: The FCA’s regulatory approach to crowdfunding over the internet, and the promotion of non-readily realisable securities by other media[2]
7. Consultation paper: the FCA regulatory approach to crowdfunding (and similar activities)[3]
8. Find out more information about the FCA[4].
9. On the 1 April 2013, the (FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
10. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.