Crowdfunding is a relatively new method of fundraising for business-based and creative projects. The regulation surrounding the industry has been rather piecemeal.
In Europe, an attitude of waiting to see how it all turns out is pervading. Whereas in Britain regulators have put their best foot forward and made proactive inroads into regulating the industry.
As with any area of law, crowdfunding regulation is far too expansive to cover on a page. This post is intended as a brief overview of regulation in the area.
The UK Crowdfunding Association
The UKCFA is a self-regulating body to which LiveTree voluntarily signs up.
It is useful for fundraisers using LiveTree to know about the UKCFA because it releases a Code of Conduct to which we have to adhere. This is meant to protect you, the project-creator. It requires:
- processes to be put in place to ensure that user information is kept safe and secure so it can be accessed in the event LiveTree ceases to operate;
- hiring competent, professional, honest people and making sure we have the appropriate systems and processes in place to run LiveTree safely; and
- having proper complaints procedures, and treating complaints fairly and in accordance with applicable regulation.
In the UK, the Financial Conduct Authority (FCA) regulates the equity and debit-based crowdfunding market. It is an independent financial regulatory body given its mandate by the Financial Services and Markets Act 2000 (as amended).
The FCA is only responsible for regulating loan-based/debit crowdfunding, and investment/equity-based crowdfunding. It does not regulate reward-funding or donation-funding, since backers of these projects will usually not be doing so for financial gain.
LiveTree works with project creators to find a funding solution that meets their needs. This means less complexity and less bureaucracy to get your project funded.
If you want to start making your project come alive, get involved!