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FCA consults on regulatory barriers to social investment

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The FCA is calling for feedback on whether regulation is stifling the social investment sector.

In its latest paper, ‘Call for Input: Regulatory Barriers to Social Investments’the regulator has published a set of questions to gather views from social enterprises, investors and financial advisers on a wide range of issues including capital raising and the potential risks to investors in the social investment sector.

The FCA has published the call for input following its consultation on regulating crowdfunding, which prompted the social investment sector to raise concerns about it hindering the sector’s growth. Social investments aim to provide a social benefit rather than solely a financial gain.

The FCA says: “We want to understand the factors that could potentially restrict this market, place a disproportionate burden on social enterprises that want to raise capital and on those wishing to market these products or securities to potential retail investors.

“We would like respondents to consider both FCA rules and other types of legislation and highlight which rule is specifically causing them difficulties when they respond.”

FCA director of strategy and competition Chris Woolard says: “The social investment market is developing quickly and regulation needs to keep pace. We want to explore the impact of our regulation to ensure it isn’t inappropriately restricting growth but continues to protect investors.”

The deadline for responses is 11 March 2016. The FCA will then decide whether it needs to clarify the requirements that apply to social enterprises and the protection available for investors.



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There are 3 comments at the moment, we would love to hear your opinion too.

  1. I’d thought the FAMR to be about tackling the fact that regulation is stifling EVERYTHING. Why pick out social investing?

  2. Social Investing. Is that a new name for flushing your money down the loo? I’m truly amazed that the regulator would countenance advisers getting involved in this.

    If you lend money you expect some collateral. The borrows are all newly established with no track record. Just look at what Dragon’s Den do. They advance funds after a fairly searching interview and then the advance is on the condition of handing over a very healthy slug of the company – allowing the Dragon to steer the ship should he so wish.

    That is the only way to approach Crowd Funding.

  3. “Social investments aim to provide a social benefit rather than solely a financial gain”.

    So the FCA wants to back an area that’s not out to make any money ! and its worried regulation is “stifling” its growth……….

    To any MP who is reading this article, this is why you don’t give your 10 year old kid a Kalashnikov………..

    It will either end in his or her own death or more worrying the death of an innocent !

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