Crowdfunding: The right balance

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There is no doubt that the crowdfunding sector has been very proactive in developing new products and funding solutions for businesses, and has disrupted the traditional world of banking and finance over the past seven years.

By Paul Spencer, director, Haworths Chartered Accountants

The main players have always campaigned for more regulation, and maintained a selfregulatory environment to top up the FCA rules, which were seemingly developed very slowly, and the first version of which was put in place in April 2014.

After a review of the adequacy of these rules in 2016, the Financial Conduct Authority has now published its plans for a further consultation on some possible rule changes later this year.

Many of the platforms welcome the ongoing reviews by FCA as it will only seek to develop confidence in this very fast growing sector. Although I’m sure it has been very frustrating for some platforms, as the process to move from interim authorisation to full authorisation has been long-winded.

Many talk of having no communication from the regulator for months on end. And this lack of full authorisation means they cannot launch their Innovative Finance ISA products, which will provide individual lenders with the opportunity to obtain tax relief on their interest returns.

However, there appears to have been a flurry of announcements of full authorisations having been granted over the past couple of months, so maybe the FCA are concentrating on progressing these before they announce their next consultation; albeit the largest platforms, those that were the first to enter the market and develop this sector, are still waiting for their full authorisation to be granted. We wish the FCA and the crowdfunding platforms well and hope that the regime provides the protection for businesses and individuals alike, whilst not strangling the refreshing approach of the management teams leading this innovation.