Crowdfunding websites clamour for clearer regulation

Dec 07 2012, 13:40 IST
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SummaryThe so-called crowdfunding sector raises cash from members of the public to fund lending and investment.

come up with a whole securities regulation; sometimes it does have to be a bit incremental and adaptive,"

Seedrs founder Jeff Lynn said. "There is no question at all this is going to be a space that will continue to move."

Some would like the operation of such platforms to be a distinct regulated activity, but others argue for smaller steps, such as a cap on the sums that people can invest or lend.

The British government, keen to improve the flow of finance to small businesses to boost the sluggish economy, has set up a

working group to look at all aspects of policy on such sites.

The FSA said that it considers authorisation of crowdfunding schemes case by case. The European Commission, meanwhile, is considered as so far having had a largely observational role.

Though the introduction of a separate regulated activity could still be some way off, the co-founder of peer-to-peer site Zopa, Simon Deane-Johns, believes that increased engagement with governments and regulators shows that things are moving in the right direction.

"Over the next year or two it should become progressively easier to set up a platform," he said, "possibly through a combination of the FSA understanding more readily where things fit within the current regime and balancing that with some self-regulation."

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