HIGH RISK: The UK’s Financial Conduct Authority is concerned at the growing number of people losing money through crowd-funding investments.
HIGH RISK: The UK’s Financial Conduct Authority is concerned at the growing number of people losing money through crowd-funding investments. Think Stock

Governments tightening controls on crowd-funding sites

NEW rules to protect people from losing too much cash in crowd-funding investments have been given a lukewarm response.

The UK's Financial Conduct Authority (FCA) - concerned at growing instances of consumers losing large sums on crowd-funding sites, where start-up firms appeal direct to investors for investment capital - has put new safeguards in place after a period of consultation.

The FCA wants to ensure inexperienced investors will in future have to certify they are not putting more than 10 per cent of their portfolios in an unlisted company through crowd funding.

The FCA's head of risk, Chris Woolard, said the regulator was trying to "strike the right balance" between encouraging investment in start-up firms and ensuring small investors knew what risks such investment brought.

However, one leading figure in crowd funding reacted with anger, suggesting the new regulations were too restrictive and accusing the FCA of "ignoring entirely our feedback" and drew uncomplimentary parallels between British and French regulators.

France has a lighter-touch approach with little or no warnings in place regarding crowd-funding investments.


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