The UK FCA is set to open a consultation period on the new rules for loan-based crowdfunding platforms following a post-implementation review of the regulations.
The regulatory body aims to address the various complexities associated with loan-based crowdfunding business models that developed since the last review of the sector in December 2016.
During the consultation period, FCA is seeking responses on multiple proposals to make necessary adjustments for regulations regarding loan-based firms.
It includes proposals to provide accurate information to the investors regarding potential investment and associated risks; adequate remuneration for the investors; and new systems to assess risk, value and price of loans transparently.
Additionally, it seeks responses on governance and proposals on implementing existing marketing restrictions for investment-based crowdfunding platforms to loan-based platforms.
FCA executive director of strategy and competition Christopher Woolard said: “When we introduced new rules for crowdfunding, we said we’d review the market as it developed.
“We believe that loan-based crowdfunding can play a valuable role in providing finance to small businesses and individuals but it’s essential that regulation stays up to date as markets develop.
“The changes we’re proposing are about ensuring sustainable development of the market and appropriate consumer protections.”
All responses for the proposals must be submitted by 27 October 2018, following which, FCA will publish the final rules in the policy statement.