What is FCA Regulation and Why is it Important in Alternative Finance?

fca-compressor

A question put to us most days is whether The House Crowd is regulated by the Financial Conduct Authority?

The short answer is yes…

…but it is important to understand why this matters so much.

If you want to learn more you can refer to the exact wording dealing with our permissions in the footer of our website or the emails you receive from us. Or, you know, just read them below:

In respect of Equity Investments, The House Crowd Limited (FRN 711355) is an appointed representative of Prosper Capital LLP (FRN 453007) (“Prosper”). Prosper is authorised and regulated by the Financial Conduct Authority.  Neither the House Crowd Limited, Prosper nor any of their affiliates or group companies provides any advice or recommendations in relation to this document.  If you have any doubt about the suitability of any investment marketed by The House Crowd Limited, or you require financial advice, you should seek a personal recommendation from an appropriately qualified financial advisor that does give advice.

In respect of Peer to Peer investments, The House Crowd is authorised and regulated by the Financial Conduct Authority under interim permission number 665205 to conduct peer to peer lending activity in the UK.

Investments are only available to certain specified persons who are sufficiently sophisticated to understand the risks. Investments in property and unlisted shares carry risk and you may not receive the anticipated returns and your capital may be at risk.

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So Who Is the FCA?

The FCA has an important role to play in helping to safeguard people when dealing with financial matters, and how the FCA treats crowdfunding plays a crucial role in our business and the way we can operate.

Crowdfunding, as an industry, is still in its infancy. Since The House Crowd first began, the FCA regulation surrounding crowdfunding has evolved to create a regulatory framework in which the industry can flourish whilst protecting investors from being misled.

FCA Regulation

 

The FCA operates with three statutory objectives:

 

  • To protect customers
  • To enhance the integrity of the UK financial system
  • To help maintain competitive markets and promote effective competition in the interests of consumers

The FCA provides firms with a number of key principles that they must adhere to and we at The House Crowd always conduct business with these at the forefront of our minds.

The Financial Conduct Authority is responsible for regulating:

 

  • Loan-based peer-to-peer platforms on which people lend money to individuals or businesses in the hope of financial return in the form of interest payments and a repayment of capital over time
  • Investment-based crowdfunding platforms

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How Does FCA Regulation Impact The House Crowd?

In line with FCA regulation, we always ensure that all of our investments are presented in a way which is fair, clear and not misleading. We always endeavour to provide you with any relevant risks that may impact on the estimated returns.

FCA Regulation

Here at the House Crowd, we are building a team with a varied set of skills and qualifications, which ensures we can competently provide a full investment and financial pack for each of our listed investments. However, it’s really important to acknowledge that we are not investment advisors, and so it is essential that if you do not fully understand any information we present that you seek your own independent financial advice.

Why Must I Register With You In Order to Invest?

Anyone who wishes to access specific investment information on our website must first register with us and certify themselves as one of three acceptable types of investor. These are:

 

  • “Crowdfunding” (Elective Professional Investor)
  • “Sophisticated” Investor
  • “High Net Worth” Investor

There are more details about these given during your registration process.

The reason for this is that the FCA restrict the promotion of certain investment products to people who fall within those categories, to ensure that anyone investing with us fully understands the investment and associated risks, and therefore have full knowledge of what they are getting into.

That’s why, when you register on our website, we ask that you select the category of investor you fall within, and we ask you to confirm your understanding of the risks involved in crowdfunding.

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Once you have fully registered on our website, we can send you more information about the investments we list on our platform, and you are then free to invest, if you choose to do so.

I Want To Invest From Overseas. Can I?

If you are an overseas investor, you must check the regulations in your own jurisdiction to establish whether your government allows you to invest in UK based crowdfunded opportunities.  This is your responsibility.

Once you’ve established that you can invest with us from your country, you’ll need to provide two separate proofs of address, which can be a utility bill (not a mobile phone bill), or bank account statement, before you can invest for the first time. This is in order to comply with anti-money laundering (AML) legislation.

Conclusion

It’s important to note that this does not mean that there are no risks involved with crowdfunded property investment. As we reiterate wherever we can, there are risks involved with any kind of investment, and The House Crowd is no different. Whilst you can make a good return on your investment, there is always the possibility of loss. It is this that you must fully understand and be mindful of whenever you’re choosing how to invest your money.

We hope that this handy guide has helped to clear a few things up for you, but if you have any further questions, we are always happy to help. For any questions specifically related to compliance, you can get in touch directly with Charlotte, our Legal expert, by emailing her at: [email protected].

Where Can I Find Out More About FCA Regulations?

Well, funny you should say that! We have some useful links for you right here:

FCA Crowdfunding Review

FCA Policy Statement

FCA Discussion Papers

Alternative Lending: A Regulatory Approach to P2P Lending

Happy reading!

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