"Crowdfunding to be put under the microscope"

Regulation of crowdfunding has been a hot topic over the last few months and looks set to increase with larger and more high profile companies using it to raise growth capital. In response, the Financial Conduct Authority (FCA), the government's newly rebranded financial watchdog, announced a “push to regulate online crowdfunding sites next year” (read Michael Bow full article here)

CrowdBnk is pleased and excited to continue working with the FCA.  We agree that it is important for investors to be protected when crowdfunding.  We spent over two years working hard to put the appropriate structures in place through BriceAmery Capital whom we are an appointed representative of which ensures that we operate with the necessary FCA permissions to ensure that our users are fully protected, and remain one of the few FCA regulated platforms in the UK.   

We believe that for regulation to be effective, two key elements are required.  First, it is important that any new regulatory regime provides a transparent and simple framework that is designed to protect both entrepreneurs and investors while facilitating the flow of much-needed capital. It should help platforms like CrowdBnk to demystify the fundraising and investment process, and provide entrepreneurs and their supporters with a simple, easy to understand process that removes the complexity surrounding building and growing a successful company in the UK.

Second, early-stage investment opportunities should not continue to exist in a closed environment.  At present, regular retail investors have virtually no access to or opportunity to invest in exciting early-stage UK growth companies.  Instead, it is the exclusive preserve of high net worth individuals and sophisticated investors.  While we embrace the FCA's view that early-stage investment should be limited to knowledgeable and appropriately suitable investors, we believe that any regulatory framework should provide the opportunity to educate retail investors so that they can participate in early-stage equity investments and are not left on the outside looking in (including extensive education on the risks involved with investing in start-ups).  Our current FCA permissions allow the entire range of investors to participate in early-stage equity projects, including the ordinary man on the street.   We believe that small investors should also be entitled to receive shares in a variety of businesses and participate in their potential success.

The Government has shown increased interest in the crowdfunding industry recently, and with the market now exceeding £250 million we agree that the FCA should continue to work towards ensuring that the regulatory regime protects the interests of both entrepreneurs and investors and ensure all platforms operate fairly within such framework.