The Times reports that the UK Crowdfunding Association has warned that the Financial Conduct Authority’s (FCA) stringent reforms could cost the economy up to £16bn in “lost investment. This could hinder small businesses’ access to finance”. In a letter to City Minister Tulip Siddiq, Bruce Davis, chairman of the association, warns that the UK is now perceived as having one of the most heavily regulated crowdfunding markets globally. This is because the FCA’s reforms include risk warnings; the banning of “inducements” to invest; the introduction of “frictions” to ensure investors do not rush into making decisions; and tougher “appropriateness” tests. There are concerns that these have deterred potential investors and increased marketing costs for platforms. According to Mr Davis’s letter, there is evidence of companies which previously raised money through UK crowdfunding platforms are considering using EU jurisdictions. They will do this to avoid what were perceived as excessive costs, uncertainties and barriers to capital raising” in the UK. The Treasury response has been typically non-committal!

BFS Comment:

Is this yet another example of the Government’s lack of understanding of the bureaucracy that constantly and increasingly hinders the growth and development of UK SMEs? Whilst caution is sensible over-burdening Bureacracy is not! If you are struggling to finance the growth of your business and need help, then call us at Business Finance Services on 01327 349 779 or e-mail enquiries@bufinserv.co.uk for a free consultation.