CP18/20: Loan-based ('peer-to-peer') and investment-based crowdfunding platforms: Feedback on our post-implementation review and proposed changes to the regulatory framework

Open consultation: CP18/20
27/07/2018
Consultation closes
27/10/2018
27/10/2018
Policy Statement
Q2 2019

In 2016 the we launched a post-implementation review (PIR) of our regulation of the crowdfunding sector (which covers investment-based and loan-based crowdfunding). This paper summarises our findings, and consults on proposed new rules and guidance for loan-based crowdfunding platforms (also known as ‘peer-to-peer’ platforms).

Read CP18/20 (PDF)

The changes we are proposing are designed to address the ways in which the loan-based crowdfunding model has developed since we introduced the loan-based crowdfunding rules in 2014. We have observed a variety of loan-based crowdfunding business models, some of which have become increasingly complex.

Based on our findings we invite responses to a number of proposals to change the rules for loan-based firms which cover:

  • proposals to ensure investors receive clear and accurate information about a potential investment and understand the risks involved
  • ensure investors are adequately remunerated for the risk they are taking
  • transparent and robust systems for assessing the risk, value and price of loans, and fair/transparent charges to investors
  • promote good governance and orderly business practices
  • proposals to extend existing marketing restrictions for investment-based crowdfunding platforms to loan-based platforms

In December 2016, we also committed to addressing a potential gap in protections for customers buying a mortgage or taking out a home finance product through loan-based crowdfunding. We are now proposing to apply rules which would normally apply to home finance providers, to P2P platforms where at least one of the investors is not an authorised home finance provider.

We are not consulting on changes to the rules for investment-based crowdfunding platforms. This is because detailed regulatory obligations already exist to manage the risk of investment business. However, the document also provides an overview of our findings in this sector, and some clarification of certain existing rules.

Who this applies to

This CP will be of particular interest to:

  • P2P platforms
  • investment-based crowdfunding platforms
  • trade bodies for these sectors
  • consumers and businesses investing or considering investing through an online crowdfunding platform
  • consumers and businesses that have entered, or plan to enter, into loan agreements as borrowers via P2P platforms
  • intermediaries who might refer home finance customers to P2P platforms
  • consumer organisations who might also like to consider the proposals

What you need to do

Please send us your comments by 27 October 2018.

Online response form

You can also:

  • email your responses to [email protected]; or
  • write to: Janet Brown and Marta Alonso, Financial Conduct Authority, 12 Endeavour Square, London E20 1JN

Next steps

We are asking for responses to this consultation by 27 October 2018 before aiming to publish rules in a Policy Statement in Q2 2019.