View Full Version : Possible regulation of crowd sourced funding in the UK
Mr Mystery
11-07-2013, 03:09 AM
So came across this as part of my professional capacity
Haven't read it yet, but thought I should post it up in the meantime.
http://www.fca.org.uk/news/cp13-13-regulatory-approach-to-crowdfunding
This is ridiculously important right now for anyone interested in either funding, hosting the funding, or seeking funding, as it's at the consultation stage, and the Financial Conduct Authority want to hear from you
Don't hold back. Get stuck in! And this applies internationally as well. Whilst the regulation would only affect the UK, given the internets inherent place in this game, they would need to clearly define when a transaction is under their jurisdiction. Normally, it's determined by the location of the beneficiary. But who is what where there's three parties that can be anywhere in the world? Want to know, join the consultation.
Mr Mystery
11-07-2013, 03:04 PM
Me again.
Just to clarify....regulation of crowd funding for the UK will happen, on account every single other form of investment is currently regulated, as are all financial things in the UK.
Crowd Funding of course, is something still in it's relative infancy, and it's also pretty unique. Normally, if I wanted to invest in something, I'd have to go through a regulated broker. This means I have a comeback if I'm given duff advice, and in certain circumstances, I may even be able to gain a refund on my investment.
But of course, with crowd funding, there's generally no actual advice given. The long and short is given on the kick starter/crowd funding website, and it's down to the individual, as there is simply no real room or need for a middle man. Which is pretty cool. Downside however is that being currently devoid of regulation, there is precious little you can do if the person or company you are funding stiffs you and the other investors, and runs off with the cash. Although pretty damned rare as far as I'm presently aware, this does happen! One springs to mind where the fundee managed to use the funds raised to move house, which he had included in his list of stuff he needed to pay for...
Yet the accessibility outweighs the real, if currently minimal risk of losing out due to an unscrupulous person abusing the system.
Now, in this instance, the regulation is looking to protect all parties. Those funding, those being funded, and those who host the funding request. Which means any regulation is likely to be quite different to that which has gone before.
I really cannot stress enough how important it is that you, the bloke or lady in the street makes their voice heard here. FCA Consultations happen all the time. But this is one of those increasingly rare occcasions where entirely new regulation and oversight is required.
So please please please, get involved.
And although the FCA can only regulate activities in the UK, don't think that not being UK based means you have nothing to add.
Currently, financial transactions are regulated by the country it occurs in. So for instance, someone in the US invests in the UK stock market, via a broker in the UK. IT doesn't matter where you are, you are covered by UK financial regulations, because that's where the money went.
Clearly, the interwebs muddies these waters somewhat. I've noticed most, if not all kick starters are currently in USD. But I have no idea if this is just for our bizarre, nerdy little niche, or a wider trend. But regardless, you will likely want to know who (if anyone) has your back when it comes to kick starters and crowd funding. this is your chance to seek that clarity!
For those in the UK....see all those PPI adverts on the telly, not to mention the ad banners, phantom text messages and cold calls about PPI Mis-selling? That's largely thanks to increased regulation on the banks, and a shocking level of mis-selling. Professionally, I'm involved in helping to sort this particular area out. And the regulation works here.
Do not miss you chance to be heard at this crucial, early stage!
Mr Mystery
11-07-2013, 03:14 PM
Thoughts on this from a third party website (http://sdj-thefineprint.blogspot.co.uk/2013/10/fca-crowdfunding-consultation.html?spref=tw)
Please note Mr Mystery, and by extent, me, the poster behind the psuedonym, does not endorse, approve, agree with or necessarily understand the views of third parties. The above stinkylinky is provided purely as food for thought, to give you, bloke or lady in the street a wider perspective should you wish to constibute to the FCA's consultation.
And here's another tidbit for your brians! (http://www.apcc.org.uk/news&events.php)
Wildeybeast
11-07-2013, 04:01 PM
Me again.
Just to clarify....regulation of crowd funding for the UK will happen, on account every single other form of investment is currently regulated, as are all financial things in the UK.
Shame that wasn't the case before the financial crash.
Mr Mystery
11-07-2013, 04:04 PM
Regulation was there.....but well, there's a reason the Financial Services Authority was found not fit for purpose and replaced!
euansmith
11-08-2013, 04:48 PM
Thanks for the info. I'm sure our regulators will find some way to mess things up as usual; to protect the criminals and penalise the straight-dealers.
GrauGeist
11-08-2013, 05:15 PM
I'm sure if this takes off, KS will simply kill the UK site, and force UK to go through the US / Canadian sites. No real issue there.
Mr Mystery
11-09-2013, 05:39 AM
I'm sure if this takes off, KS will simply kill the UK site, and force UK to go through the US / Canadian sites. No real issue there.
Could still provide regulation for UK investors. I don't know yet, as the regulation is yet to be formalised.
It's also worth nothing that regulation isn't a bad thing.
Straight dealers have nothing to worry about. It's regulation, and the competent enforcement thereof that defines and catches the criminals.
DrLove42
11-09-2013, 11:54 AM
I believe that a company must show they can't afford the minimum threshhold in their books before they can take a Kickstarter campaign.
Too many companies take out one they can afford themselves these days
GrauGeist
11-10-2013, 03:10 AM
It's not so much straight dealing, but additional overhead of being regulated. There is a financial compliance cost, risk of penalties, etc. that drive cost up.
Mr Mystery
11-10-2013, 04:01 AM
It's not so much straight dealing, but additional overhead of being regulated. There is a financial compliance cost, risk of penalties, etc. that drive cost up.
Yet with that, in the UK at least, you get added confidence from the market, and a potentially cheaper alternative to legal action in the form of the Financial Ombudsman Service. Paid for by a levy, and a per case, win or lose case fee. Upside to those flat costs? If the Ombudsman upholds in the favour of the business, it's generally dropped at that point.
Wolfshade
11-10-2013, 04:43 PM
Regulation to try and stop an investor being taken for a ride? That will stifle creativity.
Mr Mystery
11-11-2013, 07:28 AM
Then so be it. UK is currently going with soft regulations, but strongly and actively enforced. And seems to be going fairly well at the moment.
It's also to protect whoever is producing. As has been demonstrated on this thread, there are those who pledge, cough up, receive goods, then reverse the payment..... Regulation sets out rules for this sort of thing.
Did you know, Paypal is regulated in the UK?
Wolfshade
11-11-2013, 07:39 AM
I did know that. Did you know that it's EULA is 6000 words longer than Hamlet...
Mr Mystery
11-11-2013, 07:44 AM
Probably.
Main reason we see Paypal cases is between Paypal, and the business receiving the money....
Deadlift
11-11-2013, 08:21 AM
I like paypal, biggest case I had was a couple years ago. My xbox live account was hacked and somebody used the linked paypal account to purchase £90 worth of xbox live points. I rang up Microsoft - Xbox and they said it would take 30 days to resolve and at the end of the investigation I may receive a refund. I then phoned paypal who refunded me in less than 2 hours.
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