The organisation representing UK crowdfunding platforms has spoken of its anger over the Financial Conduct Authority’s plans to crack down on the sector, saying it the regulator is not enforcing the existing rules properly.
The UK Crowdfunding Association said the FCA was relying on the sector regulating itself, and was causing unnecessary delays through lengthy authorisation processes.
The FCA has said that crowdfunding platforms needed tougher rules and restrictions in order to protect investors.
Its report raised concerns about loan-based businesses, which allow borrowers and lenders to join up without involving banks, and investment platforms, through which member of the public invest in a business or campaign directly, and how they present themselves to potential investors.
It said it planned to consult on strengthening rules for wind down plans if a scheme fails, and tighten restrictions on cross-platform investment.
For loan-based platforms, the FCA said it would look to impose standards currently applied to mortgage lending in order to more tightly monitor the conditions in which loans are made.
But Bruce Davis, spokesperson for the UK Crowd Funding Association, said if the FCA enforced the existing rules “then a lot of these problems wouldn’t be there”.
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