New proposals to keep crowdfunding in check

Rapid development, and signs of poor practice in some areas, have prompted the Financial Conduct Authority to tighten its standards for loan-based and investment-based crowdfunding. Emma Radmore examines the regulator’s proposals, as well as plans from the European Union and their likely effects.

Emma Radmore (legal director) is a member of Womble Bond Dickinson (UK)’s financial services team. Contact her on emma.radmore@wbd-uk.com.

For some time now, various changes that mightaffect the ever-growing crowdfunding market have been on the cards. It is well known that the United Kingdom hosts most of the more developed and complex crowdfunding platforms, and has long recognised the differences in products as well as risks inherent in loan-based and investment-based crowdfunding. Also, of course, the UK has regulated both types of crowdfunding for some time now.