FCA Wants Crowd Investors To Be Better Informed

Ask for information and scrutinise it.

The crowdfunding regulator wants more investors to have better information. We applaud the initiative. But different parts of the press are reporting the move in a variety of ways.


The bad news first: ThisIsMoney calls the move a crackdown on peer-to-peer lending.

"The watchdog is considering much tougher curbs for crowdfunding platforms which fail to provide sufficient financial information to investors.

"The full review of the crowdfunding industry, which will be released in early autumn, is understood to demand that platforms like Funding Circle and RateSetter provide more information about the past performance of loans.

"P2P lenders will also have to be more transparent about the level of checks they make on companies looking to raise money on their sites."

Information Disclosure

The Financial Times (subscription required) reports the story differently.  It emphasises the duty to disclose information to investors, in particular [ast losses. The FT also acknowledges that this move is part of an ongoing consultation process:

“The UK’s peer-to-peer lenders will soon have to give out detailed information about how much investors have previously lost on loans they arranged, as the financial regulator finally gets its teeth into the fast growing sector. The Financial Conduct Authority (FCA) has been consulting on potential regulation for the P2P sector since December after finding “evidence of consumer detriment” in the way companies match end investors with companies and individuals seeking loans.  The FCA is expected to announce new measures later this year, including forcing P2P groups to give extra information on the past performance of loans and on how much due diligence they have done on the borrowers’ past performance.  The FCA’s latest review is the second in two years, and any measures are unlikely to come in before 

"The FCA’s latest review is the second in two years, and any measures are unlikely to come in before mid-2018, since the industry will be given between three and six months to respond to the proposals the authority puts forward later this year.”


City AM also uses the C word ('crackdown'), but leads with the idea that the regulator's aim is to standardise practice between platforms to protect investors. It offers an interesting opinion from the CEO of a lending platform:

“I think the review is necessary, because we've seen a lot of issues in the industry over the years. Another notch up on control by the FCA would potentially be a good thing,” said Stuart Law of lender Assetz Capital.

“Some lenders have definitely treated the investors like a pool of money to be invested as they see fit – sometimes doing nothing like what the investors thought they would be investing in.”