FCA drafts new rules to protect crowdfunders' lenders

"In this instance the FCA's dead hand is grasping operations like Kickstarter, and will undoubtedly strangle them"

In what way is it doing that? What regulations are strangling Kickstarter?

Zopa = crowdfunding (on a personal level)

Zopa saw a huge boost in business during the credit crunch as savers had their interest rates slashed to virtually nothing while those needing credit were turned away from banks.

And guess what... people were willing to pay between 5-15% interest, while others were happy to earn anything above what the banks wanted to give them. Granted, Zopa has always been very clear about how they run the business, and apparently their Zopa Listings business (which allowed lenders to choose which loans they wanted to support) had higher defaults, which is why they shut it down.

And it's because they (Zopa) were the facilitators between the individuals wanting to lend money and those wanting to borrow, and were doing this for a fee, they had a consumer finance license (similar to what several crowdsourcing sites have already, and also incidentally, "The Bank of Dave"). The FCA and the PRA see things slightly differently, which is why all sites are now on notice that they'll need to get their houses in order regulatorily speaking.

Re: Loan based crowdfunding sites?

@Coffeefueled - the banks currently charge a shit load for their know how. If they gave you the info to make a choice they'd be fucked.

And I hope they are.

Re: Loan based crowdfunding sites?

Defending the banks for a moment (sorry)

You do realise that in many cases a business looking to borrow money has good reason to want to keep it secret? You may really not want to tell the whole world that you are planning to expand into Europe or start a new production line if you have competition who may immediately take steps to pre-empt you. On one occasion at a company I worked for we accidentally discovered the expansion plans of a competitor. Rather than be totally ethical and pretend it hadn't happened, we took steps so effectively that we later acquired them very cheap.

Banks do provide an essential service in lending money (and borrowing it) discreetly. They also have a more transparent business in which they underwrite stock flotations. Crowdfunding is merely an extension of this to be more like the original joint stock companies - the money is raised before the company even exists. But it is still banking.

The problem comes, of course, when someone lies exaggerates extensively about the nature of the businesses in which they are investing your money. This can apply in all the cases above, whether it is banks swearing that the mortgages they hold are gold plated, US social media sites claiming they eventually will control the world by holding your personal data, or people crowdfunding perpetual motion machines.

Re: Loan based crowdfunding sites?

"What's one of those then? I thought..."

@localzuk rather than posting what "you thought" why didn't you spend a moment on a search engine then you would have found out exactly what loan based crowdfunding sites were.

Did you post because you wanted to know what a loan based crowdfunding site was? Or did you post because you thought you knew more than the FCA?

Re: Inevitable

"Currency has always been an attempt at controlling the populace "

Is this by any chance Sweeping Generalisation Friday?

A reliable currency and safe banks are essential if you want a stable society. Gold is a particularly bad idea if you ever need to travel with money, because its very portability and untraceability makes it so easy to steal. The idea that you could put money in an account at home and draw on it at a distant location was a major step forward in allowing ordinary people to travel. It is possible to have currencies that are not underwritten by governments - Scottish pounds are basically cheques issued by banks and India functioned on notes of hand issued by large moneylenders - but the issuing authority needs to be very reliable, which is basically how the Rothschilds became so important.

Currency doesn't "control the populace"; it makes commerce practical in a society bigger than a village.

Bitcoin isn't anchored in any trusted source, as we've just seen with Mt Gox. If Bitcoin goes pearshaped, there is no obvious person or building you can go to and demand an answer. It has even less associated trust than casino gambling chips. It is also impractical without some kind of dependent currency - you can't buy milk with Bitcoin except in herd sized quantities - and if you have a subsidiary currency circulating, since the Bitcoin is so unstable, how do you work the relationship between the two? Already you are looking at something like the supposed silver->pound type relationship.

Re: Inevitable

Sorry GM, but they're already going after barter. If it's transferred to another person in exchange for goods and services, it's de facto currency thus must be regulated and taxed. The government will demand its 13.5% of a chicken, if that's the tax rate.

News people are reporting how citizens save thousands using "time banking", where you could exchange hours spent walking dogs and fixing computers for plumbing repairs, etc, with no cash changing hands. Great system, helps many.

Timebanking UK

I'm waiting for the search warrants when government seizes the records so they may rightly hunt down and prosecute these blatant scofflaws. All wealth belongs to the Crown (ruling class) and it doesn't long tolerate insolence when it lets the peasants briefly play with a small bit of it.

Re: Inevitable

Actually most currencies in the world are "non-government supported" which I am taking to mean 'not issued and controlled by governments" ... they are in fact issued by private banks, who have said governments by the short and curlies. That is the real problem with money today. The few countries where the money supply is not privately controlled are of course labeled as rogue and marked for regime change (Libya, Syria...)