On February 3, the Financial Conduct Authority (FCA) published a report in light of its review of the regulatory regime for crowdfunding and the promotion of non-readily realizable securities by other media.

Crowdfunding (sometimes referred to as peer-to-peer (P2P)) lending is a way in which people, organizations and businesses, including business start-ups, can raise money through online portals (known as crowdfunding platforms) to finance or re-finance their activities. Money is subscribed mainly by individuals but, increasingly, also by institutions. Some crowdfunding activity is unregulated, some is regulated and some is exempt from regulation.

The FCA’s report includes the following sections:

  • an overview of the development of the UK P2P lending market during 2014;
  • information relating to the FCA authorization process (i.e., licensing of P2P lenders), with a summary of the steps that potential applicants should consider;
  • an explanation of how the FCA regulates crowdfunding platforms; and
  • a discussion of international initiatives relating to the crowdfunding market.

The FCA’s report notes that the FCA intends to publish final guidance on P2P platforms during the first quarter of 2015, though significantly, the report concludes that the FCA does not see a need to amend its regulatory approach to crowdfunding. However, the FCA will be conducting a full post-implementation review of the crowdfunding market and regulatory framework in 2016 to identify whether any subsequent changes may be required then.

The FCA’s report is available here.

The FCA’s March 2014 policy statement on its regulatory approach to crowdfunding is available here.