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.