FCA sets expectations on crowdfunders

In two portfolio letters, FCA has set out its expectations for Loan-based Peer-to-Peer (P2P) Lending platforms and Investment-based crowdfunding platforms. It supervises both types of platform in the Consumer Investments Directorate.

Common themes


In August 2022, FCA finalised its regime for promotions of high-risk investments. A key feature was to improve the customer journey into high-risk investments through a combination of stronger risk warnings, a ban in inducements, introducing positive frictions and better client categorisation and appropriateness testing.

In December 2022, FCA reviewed the risk warnings of crowdfunding platform firms and found that the level of compliance was far below the expected standard. It published the results of its review with examples of good and poor practice and expects to review these findings and make changes to meet FCA expectations.

FCA will continue to engage proactively with firms and issue appropriate warnings, such as a recent warning that firms may be misusing the “one off non-real time communications” exemption to avoid the financial promotion restrictions.

Financial resilience

FCA found the risk of disorderly wind-down and the increased financial losses to investors on platforms significantly concerning. Firms cooperated with FCA to address its concerns, and FCA has since revisited the issue again because of the challenging economic conditions. It wants firms to be sure to identify the absolute minimum levels of liquid and capital resources which, if breached, will trigger a wind-down. Firms should monitor their financial health as part of appropriate systems and controls and maintain adequate financial resources at all times. FCA is asking loan-based platforms to complete a self-certification attestation signed by the most appropriate senior individual, to confirm firms will take, or have taken, any action FCA requires. Firms must tell FCA who the right individual is, and FCA will send that person the template attestation for them to complete.

Consumer Duty

FCA expects firms to have implemented the Consumer Duty in full. It notes that its supervisory focus aligns with the Consumer Duty outcomes, such as:

  • Consumer understanding – firms must ensure that investors fully understand all aspects of the investment they are making;
  • Products and services – firms must apply appropriate levels of due diligence;
  • Price and value – platforms that need to produce Outcomes Statements must make sure they are accessible, comprehensible and clear about performance. Fees and charges need to be transparent and fair;
  • Consumer support – Firms must support consumers throughout the life of the product or services, and the support must be suited to the consumer’s needs, including those with characteristics of vulnerability.

Specific expectations of investment-based crowdfunding platforms

Expectations on firms include:

  • Monitoring how they operate ‘bulletin boards’ and secondary markets to ensure that they do not cross the demarcation between these and MTFs. Firms are expected to comply with PS23/11 until FCA responds to the feedback it has received on this policy statement;
  • Following the publication of PS23/13, firms must submit an application for permission to approve financial promotions before 6 February 2024 to take advantage of transitional arrangements; and
  • Continued engagement with the Public Offer Platform, the regime that will allow the FCA to set specific rules for types of public offers of securities that are not admitted to a public market. FCA is currently considering feedback to Engagement Paper 5.

Next steps

FCA plans to issue data requests to firms to supplement regulatory returns, which will help it to spot outliers and identify potential harms earlier.


Vida Fatemi