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Alternative Finance blog

Crowdfunding Investor Types

Crowdfunding Investor Types

2 days ago


The new Financial Conduct Authority (FCA) rules, PS19/14, coming into force on 9 December 2019 state that crowdfunding and peer-to-peer (P2P) platforms must classify their potential investors.

All regulated P2P lending platforms are required by the FCA to carry out the investor classification and appropriateness assessment. This is to ensure the investor has the appropriate knowledge, understanding and information in advance of the P2P lending process.

Investors will now have to describe the type of investor they are on each of the platforms they are registered with under section 2.21 to ensure that platforms only communicate financial promotion to retail clients:

High Net-Worth Individual

Certified Sophisticated Investor

Self-Certified Sophisticated Investor

Investors will also need to demonstrate they understand the risks associated with investing before a peer-to-peer platform can start lending their money to businesses.

Many platforms have started introducing the assessment test already and investors who have not completed the test prior to 9 December 2019 will no longer be able lend to businesses. However, as soon as the assessment is complete investors can continue helping and supporting entrepreneurs.

This is only one small part of the new FCA rules detailed in their consultation paper, PS19/14; we will be providing further detail on the rules leading up to 9 December 2019.

Read more on the PS19/14 rules: https://www.fca.org.uk/publication/policy/ps19-14.pdf


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