The Financial Conduct Authority issued a consultation paper on the regulation of crowdfunding activities in the UK, in advance of assuming the responsibility for regulating consumer credit in the UK (previously the remit of the Office of Fair Trading).
The FCA’s aim in issuing the consultation paper is to make the market more accessible to retail clients to help foster competition and to facilitate access to alternative investment options. The FCA is keen on ensuring that only investors who understand and can bear the risks of crowdfunding participate in it.
To achieve its aims, the FCA is proposing to restrict direct offer financial promotion of unlisted shares or debt securities by firms to one or more particular types of client (broadly speaking, high net worth, sophisticated investors or those who have taken advice or will limit the percentage of their portfolio invested through crowdfunding).
Following consideration of comments, a Policy Statement is due to be issued by March 2014. Consultation Paper.