Crowdcube gets official approval

Crowdfunding website Crowdcube will now be regulated by the Financial Services Authority (FSA), after it received approval this week. Crowdfunding is a relatively new phenomenon in the financial world – it involves members of the public (as opposed to seasoned investors and VCs) buying a direct equity stake in a growing business through the vehicle of a website. 

There have been concerns raised about the protection of investors, who may not be aware of the risks involved or be as cushioned from losses as larger investors are. However, in line with FSA regulation, potential investors on Crowdcube will now be required to undertake a questionnaire confirming their understanding, will be protected by the Financial Services Compensation Scheme and will be able to complain to the Financial Ombudsman Service.

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