New Regulations, Quick Adaptations
On June 8, MAS
announced regulations for lending-based crowdfunding. The news wasn’t a
surprise to Funding Societies, as we’ve always been proactive towards
regulations. But it is important that you are aware of the news. In short,
lending-based crowdfunding platforms would require licenses – likely in late
2016 or early 2017 after Parliament passes the regulations. The license
requirement is fairly simple and we do not expect much disruption.
key highlights, with MAS’ full response here:
§ Low operational risk requirement for
“dealing intermediaries, as long as they do
not handle or hold customer monies, assets or positions” – the reason we
painstakingly implemented escrow accounts.
§ Investor pre-qualification tests to show
that investors have “sufficient knowledge or experience to invest” in P2B loans
OR they “are suitable for [investors] in light of [their] investment objectives
and risk tolerance.”
§ Risk disclosure acknowledged
by investors on their first investment and when they’ve material change.
§ Credible track record of the
corporate entity, shareholders and key officers.
At Funding Societies, we would have preferred,
and have indeed submitted a stricter 10-point regulatory proposal to MAS a few
months back, as we are concerned about the potential destructive competition
which we expressed on the Sunday Times.
advertising guidelines also prevent misleading ads.
Rest assured that we would do our very
best to not only comply, but also go beyond regulations to build a healthy
industry – just as we play an active role in Indonesia’s P2B-lending regulatory
and industry scene.