Peer-To-Peer Platforms Mislead Investors

Consumer watchdogs have accused crowdfunding and peer-to-peer lending web sites of misleading investors.

One of the main risk checks is ignored by many firms, says regulator the Financial Conduct Authority (FCA).

Rules set down in April 2014 demanded online platforms should make sure investors were independently advised to invest, were ‘sophisticated’ regular investors or were not investing any more than 10% of their available assets.

The rules were aimed at safeguarding consumers unfamiliar with crowdfunding and to stop them losing all their money in high-risk investments.

Cherry-picking information

Almost a year later, the FCA has revisited the market and found that many platforms are failing to implement the rules and the problem is likely to worsen.

According to Cambridge University, £1.3 billion was invested through peer-to-peer platforms last year – triple the £430 million that changed hands in 2013.

Upcoming pension freedoms are expected to unleash hordes of investors looking to bolster their pension incomes with high return investments with some of the money destined for crowdfunding and peer-to-peer lending thanks to the promised high returns in comparison with retail investments.

“These web sites have a habit of cherry-picking the information they display,” said an FCA spokesman. “They highlight some parts and down play the rest, which is not really doing investors any favours when they are trying to assess risk.

“Our intention is to make sure investors in this space are properly protected.”

Warnings about bogus advisers – Worldwide

Here are the latest rogue financial firm warnings on the International Organisation of Securities Commissions we site:

  • Simple Trading Corporation Limited – Spain
  • FXGL Capital – Spain
  • Binary Investments Global Limited – Canada

Warnings about bogus advisers – UK

Here are the latest bogus financial advisers listed on the Financial Conduct Authority (FCA) web site:

  • 360 Capital Management Limited t/a 360 Capital Markets
  • Nakitrade
  • GDPX Assets ltd
  • Globus Capital Associates Limited (GCAL)

Dealing with an unregulated firm

If you buy shares, save money or invest with an unregulated firm, you lose any protection offered by the Financial Ombudsman and the Financial Services Compensation Scheme. Broadly, you have no independent place to complain if the deal goes wrong and are unlikely to win any compensation.

Checking if a firm is regulated

Go to the Financial Services Register to check if a firm is regulated in the UK.

Reporting a suspected bogus adviser

Find out how to report unauthorised advisers on the FCA web site

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