The Cambridge Centre for Alternative Finance (CCAF), which regularly authors reports on the global alternative finance industry, is partnering with the FCA on a report which will directly inform the FCA’s ongoing post-implementation review. The review – which was launched in July – pertains to the sector-specific regulatory framework which was implemented by the regulator in the latter stages of 2014, on an interim basis. With full authorisations for the peer-to-peer platforms now looming, the FCA is clearly seeking a deeper level of insight into the market.
The CCAF’s work will offer a high-level perspective on transactional volumes within the sector, but crucially will also provide insight as to the understanding of investors in the sector – particularly in relation to risk. The style in which “crowdfunding” platforms market themselves to investors was a clear point of concern within the post-implementation review. The new joint research initiative will seek to gauge exactly how investors assess risk, and to what extent they make use of the information made available to them by platforms.
The research will also focus on determining what types of investments alternative finance platforms are competing with for investor cash, and how these products compare in terms of risk and reward. Finally the research will seek to determine to what extent investors and platforms share the burden of due diligence, and whether an expectation gap exists between the two groups. The research will encompass both peer-to-peer lending and equity crowdfunding platforms.
“It is our great pleasure to partner with the FCA in this joint thought leadership programme and provide independent academic evidence to support its post-implementation review of crowdfunding regulations,” said Robert Wardrop (pictured above), executive director of the Cambridge Centre for Alternative Finance. “Since inception, the Centre has strived to work with regulators and policymakers around the world to further our understanding of crowdfunding and other forms of online alternative finance, in turn, to inform evidence-based policymaking and regulation. We look forward to collaborating with the FCA very closely in the coming months to systematically collect market data, gather crowdfunding user feedback and undertake policy-related analysis.”