The Financial Conduct Authority (FCA) is asking for advice from interested parties about whether crowdfunding regulation is working in the UK, and how it could be improved.
We knew this was coming, because when the FCA took over regulation of equity crowdfunding and peer-to-peer lending in April 2014, it committed to undertaking a 'post-implementation review' in 2016.
Today's announcement is the start of that review. It doesn't mean that anything is wrong, or that politicians or the media have called for changes.
This post-implementation review of crowdfunding regulation was always planned, because the regulator recognised that alternative finance was a new industry, and that regulation had to support innovation, as well as protecting the participants, and it had to do that at a reasonable cost. Satisfying all these goals at the same time is a major challenge, and is the reason why equity crowdfunding is struggling to get of the ground in the United States, according to this article by Jeff Lynn, the CEO of Seedrs.
The first step of the review is termed a 'Call For Input'. In plain English, that means the regulator is inviting anybody to tell it whether it's doing a good job, and what it should be thinking about, which might not bewhat it has been looking at so far.
It isn't an essay contest. The response form asks twenty-two questions, and then gives you a free text box to reply. To give you a taste of how wide ranging the survey is, uestion 15 of 22 begins: " Are there any other matters we should take into account..." By that stage, the survey has already covered topics as broad as the development of business models, the differences between retail and institutional investors, standards of disclosure, and risks that firms’ current infrastructure might not be adequate to deal with.
We don't envy the research who jave the job of collating the responses and giving them some order. But we do hope people and organisations active in our industry take the call seriously, and provide focused responses that will help the rfegulator decide what to do going forward.
The full call for inputs can be consulted on the FCA website, There is an 18-page document to download, which will explain the background to the work, and also direct you to the page where you can respond to the questions.