Q&As

Could you direct me as to where I can find relevant information regarding the general legal and regulatory environment surrounding fintech and peer-to-peer lending in the UK including any relevant FCA principles?

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Published on LexisPSL on 02/08/2017

The following Financial Services Q&A provides comprehensive and up to date legal information covering:

  • Could you direct me as to where I can find relevant information regarding the general legal and regulatory environment surrounding fintech and peer-to-peer lending in the UK including any relevant FCA principles?
  • To what extent are the rules relating to ‘crowd funding’ relevant?

You may find: Fintech—overview and Cryptoassets—overview useful which contain a number of Practice Notes and news items relevant to the financial services regulatory environment surrounding fintech.

Practice Note on: The regulation of crowdfunding platforms also sets out three broad types of crowdfunding, each distinguishable by the return for the funder:

  1. Investment model—individuals make investments in return for a share in the profits or revenue generated by the company/project

    In the UK, the financial services regulatory regimes for corporate finance business and investment funds both tend to shape the structure of investment-based crowdfunding platforms. As both regimes have not traditionally been used to facilitate the participation of large numbers of retail investors, there was lobbying for the creation of a new regulatory regime specifically designed for investment-based crowdfunding. However, the Financial Conduct Authority’s (FCA) approach was to acknowledge the permissibility of investment-based crowdfunding as a valid business model operating under the existing regime, with minor amendments. For example, the FCA clarified its expectations of firms wishing to promote 'non-readily realisable securities' covering most unlisted shares and debentures: such investments can be sold on a non-advised basis provided firms ensure the investors have the requisite level of understanding. The FCA has also signalled its disapproval of platform operators making use of exemptions in order to avoid becoming subject to regulation, although the legal loopholes that crowdfunding firms had

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