The UK’s Financial Conduct Authority (FCA) published a “Dear CEO” letter on February 28, 2017 requiring urgent action from firms operating loan-based crowdfunding platforms that facilitate loans to lending businesses. UK-based crowdfunding platforms and some of their borrowers that fail to act may be in breach of certain regulatory requirements.
Requirements for UK Loan-Based Crowdfunding Platforms by March 14, 2017
Relevant firms must provide FCA with information by March 14, 2017, about
(i) whether the crowdfunding platform has been facilitating loans to lending businesses who have lent to others without the required “accepting deposits” permission; and
(ii) the platform’s proposed actions to resolve existing breaches and prevent future breaches.
Without required permissions, crowdfunding platforms must immediately stop facilitating the acceptance of deposits by borrowers. This letter is a follow-on to FCA’s ongoing efforts to identify and regulate so-called “shadow banking” activities.
Loan-based crowdfunding platforms will now need to undertake some degree of due diligence on the activities and regulatory permissions of their participants.
Read the full Client Alert.