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The FCA is about to shake up crowdfunding


The days of straightforward crowdfunding and peer-to-peer lending in the UK may be numbered. The Financial Conduct Authority (FCA) has ruled that it's the responsibility of organisations like Seedrs to ensure investors are either certified as sophisticated or of high net worth, or are limited to investing ten percent of their net assets.

The rules relate only to those crowdfunding services that are loan or investment based. Crowdcube already employs similar measures. This reporter was promptly put off an investment inquiry on the platform when a form popped up asking if I would like to self-certify that I am a sophisticated or high net worth investor. This involves having been an angel investor for six months, having invested in an unlisted company recently, or earning £100,000 or more annually. No, no and no. Personally, this was probably a good thing. But concerns have been raised that for the investor community the new regulations threaten to stifle progress. Small investors -- the very groups the crowdfunding model was designed for -- could be put off by the impending additional red tape. If these investors cannot show they are sophisticated, high net worth investors, they cannot top the ten percent bracket.

By: Liat Clark,

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