Crowdfunding is to be welcomed, but investment in small businesses isn't for everybody, according to the latest discussions coming out of Parliament. John Tyrie MP, who chairs the Treasury Select Committee, has been writing to the regulator for a few weeks, and like many elected representatives before him, he's trying to support two positive initiatives that don't always work together.
Thie stock exchange intelligence platform Mondo Visione has just published this quotation from Mr Tyrie.
"On the basis of this correspondence, the risks associated with crowdfunding platforms appear to be restricted to those using the platforms to lend or invest.
Government policies to promote the crowdfunding sector may have the right intention – to increase competition in the SME lending market – but government tax incentives, in effect government subsidies, may be encouraging some consumers into the use of inappropriate products. The FCA needs to be alert to these risks. The Government may need to reconsider these tax incentives."
Mr. Tyrie believes in supporting Britain's businesses - and so do we. He also believes in consumer protection - and so do we. But there's - and so do we. But there's something about that word 'inappropriate' that makes us think of the nine o'clock watershed, and people writing letters of complaint about Rude Things they have seen on television programmes.
Crowdfunding is all about inclusiveness. If you have fifty pounds to spare, you should be allowed to do all the things that your rich neighbour can do with his five thousand pounds. You deserve to be protected from people who lie to you, cheat you, and try to streal from you, but you shouldn't be told that that you can't come in because it's 'inappropriate'. Investors are not children, and rich people are just as likely to be gullible, greedy or stupid - which are the main character traits that fraudsters look for in their targets.
When Another Crowd was little, our grandmother tried to tell us "There's no such thing as bad weather - only the wrong clothes.' We spent enough wet Bank Holidays in Blackpool to know that there definitely is such as a thing as bad weather. But we agree about the clothes.
Investing in crowdfunding, whether equity, or lending, or bonds or any of the other varieties, Is something you should only attempt if you have read and understood the small print, and you are prepared for things to go wrong and you understand how you will cope if it does.
If it makes nervous, don't invest. (But do keep reading, and we hope that learning will help.) It's not magic, or rocket science. Crowdfunding is an interesting activity for grown-ups of average intelligence. We hope the regulations will protect ordinary investors, in the way that they protect the wealthy ones.