News Briefing - Crowdfunding, SME And Alternative Finance

Woman and man sitting at a table, going through a report together.

1.UK – P2P

The Mail looks at the FCA’s proposed rule changes for P2P investors.

“Savers will soon have to pass a test to prove they understand the risks before they can put their money in to peer-to-peer investments. 

The City watchdog has unveiled new rules as part of a crackdown on the firms that connect savers' cash with businesses needing loans.

The announcement comes weeks after property-focused peer-to-peer platform Lendy went bust, leaving 20,000 investors with potential losses of £165 million.

The Financial Conduct Authority (FCA) now says that from December customers will have to answer multiple choice questions to prove they understand the risks.

Investors will be asked if they are aware they could lose their savings, that they understand returns are not guaranteed, and if they know what will happen if the portfolio becomes insolvent.

Peer-to-peer products are not protected by the Financial Services Compensation Scheme which covers cash savings and investments up to £85,000 held per firm.

From December 9, the FCA will bar new investors who have not received financial advice from handing over more than 10 per cent of their assets to the platforms. 

This limitation will not apply to those who have made two or more peer-to-peer investments in the past two years or high net worth customers.

Restrictions will also be imposed to stop firms mass-advertising as they did near the end of the tax year to lure ISA savers.”

 P2P Finance News carries some industry reaction.

Here's what the industry thinks of the FCA rule changes | Peer2Peer Finance News

The Financal Conduct Authority (FCA has released its long-awaited, updated rules for the peer-to-peer lending sector, which confirm the introduction of investor marketing restrictions. Here’s the industry reaction so far – keep an eye out for rolling updates

2. UK – AltFi

Crowdfund Insider reports:

LendInvest, an online marketplace for mortgages, announced on Tuesday it has reported a period of strong growth and significant operational and strategic progress for the year, ending on March 31st. The online lender revealed the following:

  • Platform revenue increased 36% to £72.7m (FY18: 53.6m)
  • Platform EBITDA up 82% to £4.0m (FY18: £2.2m)
  • Platforms assets up 69% to £788.3m (FY18: £467.6m)

LendInvest said they the company showed a statutory profit from operations of £3.3 million for the year.

3. UK – AltFi

“According to Starling, Tribe Payments provides all aspects of payments technology to businesses, primarily issuers and acquirers, that serve merchants and consumers using its modular platform ISAAC. As Europe’s only issuer processor working with Mastercard, Visa and UnionPay International, Tribe offers unrivalled market connectivity.”

 

4. UK – AltFi

More fallout from the LCF affair, as reported in FT Adviser.

“The Personal Investment Management and Financial Advice Association is encouraging the regulator to look at its supervision work, warning 'regulatory deficiencies' were contributing to more claims from consumers.

In its response to the Financial Conduct Authority's consultation on the impact of the Retail Distribution Review and the Financial Advice Market Review, seen by FTAdviser, the trade body stated it is concerned about a rise in scams which was undermining consumer confidence and increasing the cost borne by the industry.

It stated "regulatory deficiencies" were as much to blame for the trend as poor behaviour from firms.

The trade body gave the London Capital and Finance scandal as an example, arguing it was unclear whether or not victims believed themselves to be receiving financial advice and were acting accordingly.

"We would welcome stronger regulatory oversight in this area in particular," it noted.

London Capital & Finance went into administration at the end of January, putting the funds of more than 14,000 bondholders at risk.

Shortly before the collapse the Financial Conduct Authority had ordered London Capital & Finance to stop marketing its fixed-rate investment bonds and Isa products and the provider had its assets frozen by the regulator.

But critics said the regulator did not act quickly enough and had failed in its supervision of the firm, leading to calls for Andrew Bailey, the FCA's chief executive, to resign.”

5. International – FinTech

 

Visa and Currencycloud, an enterprise-class payments platform, announced on Tuesday (June 4) a partnership to drive more innovation in cross-border and travel payments, according to  pymnts.com.

In a press release, the two companies said the agreement meshes with Visa’s stated goal to make secure digital payments possible at home and when people are traveling. Under the agreement, Visa’s customers and banking and FinTech partners will have the option to use Currencycloud’s cloud-based payments platform to provide in-demand services, including multi-currency wallets and real-time notifications on foreign exchange transactions. It will also offer customers the ability to better manage travel abroad via improved visibility and control of money.

6. International – FinTech

Crowdfund Insider on moves towards Crypto audits.

“The IFRS (International Financial Reporting Standards Foundation) has been ruminating on the challenges of accounting for cryptocurrency for some time now. Next week (June 11-12), the IFRS Interpretations Committee will be holding a meeting in London with crypto on the agenda listed as one of the items with a decision to finalise.

A staff paper (embedded below) outlines a prior meeting discussion that tackled crypto:

In March 2019 the IFRS Interpretations Committee (Committee) published a tentative agenda decision on holdings of cryptocurrencies. For the purposes of its discussion, the Committee considered cryptocurrencies with all the following characteristics:

(a) a cryptocurrency that is a digital or virtual currency recorded on a distributed ledger and uses cryptography for security.

(b) a cryptocurrency that is not issued by a jurisdictional authority or other party.

(c) a holding of a cryptocurrency that does not give rise to a contract between the holder and another party.

The paper references 20 comment letters submitted by interested parties from around the world. The comments included the opinion of staunch crypto proponents the Chamber of Digital Commerce which told IFRS that:

“… it is important to understand that digital assets may not fit neatly into simply one characterization.”

According to the paper, 16 respondents said the Board should consider undertaking standard-setting for holdings of cryptocurrencies either instead of, or in addition to, the Committee finalizing the agenda decision.

The exercise is part of a step-stone procedure in disseminating agreed upon standards but also shows the challenges, and disparity of opinion, when accounting for diverse digital assets.”

How Do You Account for That? The IFRS to Address Accounting for Cryptocurrency in Meeting Next Week | Crowdfund Insider