This consultation paper (CP) is one of a series of consultation papers that will determine our approach to the regulation of consumer credit activities – this will include responsibility for regulating ‘loan-based crowdfunding’, also known as peer-to-peer lending platforms. The CP also includes proposals affecting the way we regulate investment-based crowdfunding.
Crowdfunding is a way in which people, organisations and businesses (including business start-ups) can raise money through online portals (crowdfunding platforms) to finance or re-finance their activities and enterprises. Some crowdfunding is unregulated, but if it involves a regulated activity, without an exemption applying, then the FCA is responsible for its regulation.
Why are we issuing this consultation paper?
On 1 April 2014, we are taking over the regulation of the consumer credit market from the Office of Fair Trading (OFT). Our other consumer credit consultation papers will consult on appropriate measures to protect borrowers. In this paper we propose regulations designed to protect investors using loan-based crowdfunding platforms. We are also consulting on our approach to protect investors on investment-based crowdfunding platforms.
Who is this CP aimed at?
The paper will be relevant to:
- any consumers and consumer organisations with an interest in crowdfunding and similar activities
- firms that operate loan-based crowdfunding platforms on which consumers can invest in regulated loan agreements, and firms that plan to do so
- firms, and their appointed representatives, that operate investment–based crowdfunding platforms on which consumers can buy investments such as unlisted equity or debt securities, or units in an unregulated collective investment scheme, and firms that plan to do so
- any firm that communicates direct offer financial promotions for unlisted equity or debt securities to retail clients, who do not receive regulated advice or investment management services in relation to those investments, and who are not corporate finance contacts or venture capital contacts
What are the next steps?
Please send us your comments by 19 December 2013 via the online form[3].
We will consider your feedback and publish our rules in a Policy Statement in February or March 2014.
Want to find out more?
For more information:
- view the FCA Handbook[4]
- High-level proposals for an FCA regime for consumer credit, CP13/7, March 2013[5]
- Detailed proposals for the FCA regime for consumer credit, CP13/10, October 2013[6]