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Joining forces to review the alternative finance industry


Financial Conduct Authority and the University of Cambridge to review the alternative finance industry.2016_news_joiningforcestoreviewthealtfinindustry-883x432

The Cambridge Centre for Alternative Finance (CCAF) at Cambridge Judge Business School, University of Cambridge is pleased to announce today that they will be working with the Financial Conduct Authority (FCA) to carry out research with the investors and fundraisers on equity crowdfunding and peer-to-peer lending platforms.

The FCA is the UK’s financial conduct regulator and CCAF is a leader in crowdfunding research.

The FCA and CCAF are working together in a programme of research that will identify any changes in the nature of the industry, the expectations of its clients, and its place in the financial services landscape.

Robert Wardrop

About the research

The FCA and CCAF’s joint research will focus on:

  • What the crowdfunding investor population really looks like and how it is changing
  • How investors on the platforms assess risks, and how they use the information provided to them by fundraisers
  • What types of investments crowdfunding firms are competing with for investors’ money – and how they compare in terms of risks and returns
  • How platforms and investors share the burden of due diligence and whether an expectation gap exists between the two sides.

The joint research is expected to collect and analyse data from investor and fundraiser
surveys, qualitative interviews and crowdfunding platforms’ transactional databases. The
first outputs from this work will inform the FCA’s ongoing post-implementation review of
crowdfunding regulation.

Robert Wardrop, Executive Director of the Cambridge Centre for Alternative Finance, said:

It is our great pleasure to partner with the FCA in this joint thought leadership programme and provide independent academic evidence to support its post-implementation review of crowdfunding regulations. Since inception, the Centre has strived to work with regulators and policymakers around the world to further our understanding of crowdfunding and other forms of online alternative finance, in turn, to inform evidence-based policymaking and regulation. We look forward to collaborating with the FCA very closely in the coming months to systematically collect market data, gather crowdfunding user feedback and undertake policy-related analysis.

About the FCA’s post-implementation review

In 2014, new rules came into force for the regulation of crowdfunding and peer-to-peer lending platforms operated by FCA-authorised firms. At the time, the FCA committed to carrying out a full post-implementation review of the crowdfunding market and regulatory framework in 2016 to identify whether further changes are required. The post-implementation review is considering whether the current regime continues to deal adequately with the risks to consumers or whether the FCA’s rules need to be changed to reflect market developments.

As the first step in this review, the FCA published a call for input in July 2016 which summarises some of the market developments we have seen recently and our current concerns. The call for input is now closed but the FCA is still keen to hear from parties with an interest in this sector.