The Financial Conduct Authority is to partner with Cambridge University's Centre for Alternative Finance (CCAF) to ensure that government policy on alternative finance, fintech, and crowdfunding benefits from the best possible evidence base.
The regulator launched a reviewi n July to examine the sector-specific framework which it implemented when the FCA took over responsibilty for equity crowdfunding in April 2014. The review was always written into the regulator's plans, although some press reports have suggested that the FCA was reacting to negative criticism.
Based in the University's Judge Business School, the CCAF is headed by Executive Director Robert Wardrop, a former banker turned academic. The centre has produced a number of major research reports into alternative finance in all the world's major economies. Two members of Dr. Wardrop's team have addressed Another Crowd's seminars.
The move has been positively received in the industry and the specialist media. The Financial Times, which is generally skeptical of alternative finance, said that the FCA was 'trying to untangle the so-called alternative finance sector." Ryan Weeks, writing in Alt-Fi News, was more informative:
"The CCAF’s work will offer a high-level perspective on transactional volumes within the sector, but crucially will also provide insight as to the understanding of investors in the sector – particularly in relation to risk."
Mortgage Introducer magazine said that the regulators had been very interested in a study the CCAF academics had undertaken in 2014, published as Understanding Alternative Finance, and have asked the university to repeat the study with the most up-to-date data, "to understand the way in which the investor base is potentially changing.”
“For example, are there more retail investors in the market so they can better understand the risk and the way risks are portrayed.”
Another Crowd is delighted to learn this approach is being taken. It's important that our regulators have access to the best quality evidence, and we are very pleased that the FCA has taken the trouble to ask for it.