The fast-growing crowdfunding sector will be subject to tighter regulation to provide more transparency and protection for investors.
Crowdfunding allows individuals and small businesses to raise money from pools of investors who can put money into peer-to-peer lending schemes or securities such as unlisted shares. Such fundraising is often hosted on online platforms such as Crowdcube, Funding Circle and Kickstarter.
The Financial Conduct Authority said companies seeking funds would have to provide "fair, clear information" to allow investors to assess risk. Firms running loan-based platforms would also be required to have provisions for loan repayments to continue.
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