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CrowdConsent Aims to Solve FCA Crowdfunding Regulation Requirements

posted Dec 20, 2013, 12:22 PM by Unknown user

With the Financial Conduct Authority (FCA) consultation period scheduled to end shortly, CrowdConsent is announcing a simple technology solution to address current proposals to regulate both equity and debt based crowdfunding.

The CrowdConsent service allows platforms to demonstrate that they have obtained the informed consent of crowdfunders in a way that is independently verified. This solution has been welcomed by multiple industry leaders and platform owners who believe that crowdfunding should be open to all and regulations, as currently proposed by the FCA, would exclude the majority of “the crowd” from crowdfunding.

Barry James, designer of CrowdConsent and founding director of the Social Foundation andTheCrowdfundingCentre, has created this technology to provide what could be a new industry standard to ensure a higher level of confidence than ever before that the appropriate consent has been consciously and actively given and precisely recorded – but with the minimum of friction and fuss for both the user and the platform.

“What this does is ‘place the onus on consumers to take responsibility for their actions and investment decisions’ in full accord with the principles the FCA has laid out* avoiding any need for increasingly complicated and restrictive ‘nanny’ measures to protect people from themselves.

“This makes redundant any need for the FCA’s 10%-of-portfolio rule and so removes the need to exclude ordinary people (‘non-sophisticated’ investors) access to equity crowdfunds. Under this problematic rule people would be restricted to investing less than 10% of their ‘investible portfolio’ – which sounds fine until you realise that only a tiny proportion (who are in any case sophisticated investors) maintain such a portfolio. They freely choose to make small investments and contributions from disposable income or savings.”

“The CrowdConsent service makes it safe for them to do so with the full assurance that they are fully informed of the possible outcome that they may lose that investment – and should only make it in full knowledge of this.”

Platform owners concerned about the implications of FCA regulation are backing CrowdConsent.
Mark Thackeray Founder / Director of said:

“Crowdfunding provides an opportunity for members of the wider community to support the growth of companies by risking small amounts. The beauty of this innovative approach is that it provides proof positive that warnings have been presented and actively acknowledged removing the fear that people may be unaware of the risk and so any need to exclude people – crucially helping to keep the crowd in crowdfunding.”

Karen Darby, Founder and CEO of CrowdMission, said:

“At last a simple and effective way to keep crowdfunding inclusive. I hope the legislators take heed, if they don’t then I would question their motives.
“Whether you are an investor or an entrepreneur looking to launch a pitch on CrowdMission we insist that all of our members sign up to our Social Investment Values that emphatically preserve the rights of the individual to invest in mission-driven businesses.”
Stephen Hazell-Smith, an architect of the AIM market and founding chair of the Plus Market who has 30 years experience of investing in small companies says:

“The regulator is always concerned that there is no proof that investors have read the risk warnings. CrowdConsent puts that concern to rest.”

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