It’s hard to credit but here we are again with the Financial Conduct Authority (FCA) indulging in secret briefings to generate FUD based negative news stores – including ‘Crowdfunders Face Crackdown’ in last Sunday’s Times.
It was almost exactly a year ago that Real Business published my first article criticising the then FSA (now the FCA) for nasty, sloppy and damaging handling of a new industry that holds so much promise at a time when we need all the help we can get. Critical especially as they played such a full role in the disaster the banks have inflicted upon us all.
But this time it’s different. This time there’s really no excuse – and it seems almost wilful. A year on we have engaged with them fully. Not just anyone but David Geale Head of Investment Policy so the man responsible for this whole area at the Financial Conduct Authority sat with us in a committee room at the House of Commons a couple of months ago and talked in what, at the time, seemed somewhat chastened tones about what they had learned and were learning – giving input to the Westminster Crowdfunding Forum. To judge by their actions this last week what the the FCA have learned is precisely: nothing.
I was persuaded along the way that their ignorance and clumsy mishandling was somewhat forgiveable. That they needed time and help to understand what, after all, is a major innovation and to gain a more positive insight. Other’s told me that these were ‘dirty tricks’ typical of a cynical agency who mostly behave in a way that is far from transparent and totally unaccountable. It now looks as if they were right.
To quote Barry Sheerman, who has taken several months to look into the matter, “These negative, unattributed comments from the FCA, which strongly imply that Crowd Funding should be reserved only for experienced investors and city-types, are unhelpful and give a distorted picture of the Crowd Funding sector. Those of us with deep knowledge of the sector have not seen any evidence of investors being systematically misled or exploited’.
Or indeed at all. A year on there is no evidence – none that has been advanced at all – that this is the case. And plenty to the contrary. In fact it’s increasingly clear that Crowdfunding operates differently than the shadowy world of these ‘city types’ because it is by it’s nature open. Everythig is on show and the crowd is watching – and typically has many thousands of eyes. As someone who should know has recently pointed out many more than any regulator can manage.
Meanwhile the FCA stick their finger in their ears and stick to their guns regardless of the evidence a year on. If it were not so tragic – and downright dangerous for our future as a nation and an economy – it would almost be funny.
These ‘fears’ are in other words nothing short of manufactured. The behaviour sadly familiar but none the less reprehensible for that. But we can no longer afford this sort of thing. Our economy needs the thousands of new businesses and entrepreneurs that Crowdfunding can support and help make happen. It does not need regulators, or their staff, behaving irresponsibly and prepared to leak unattributable fear-uncertainty-and-doubt stories to the press based on zero evidence.
It may be convenient for the FCA to seek to limit Crowdfunding to ‘experienced investors’. It may make the ‘problem’ go away for them and lead to a quiet life. But that is hardly the point. Nor is it what they’re there for.
They may see Crowdfunding as a way for some unidentified unscrupulous person to relieve people of their savings. Those who’ve looked more closely see it as a new freedom. A new way to support entrepreneurs and continuously create many more businesses and rebuild the economy. So far all the evidence is on our side – and there’s plenty of it. There’s little or no evidence to the contrary.
Plus the proposed ‘cure is many times worse than the alleged ailment. Chopping off a leg to sort out an itch suspected of being an athletes foot problem. Except there’s no evidence that there’s a problem at all. Apart from a phantom itch.
Which is why, a year on, I join my voice with that of Barry Sheerman and the many many others – a growing throng – who call upon the Chancellor to demand better of the FCA. Not just that they desist from unattributed briefings based on zero evidence and the grab bag of dirty tricks at their disposal. But that they also start to look at the real world evidence, rather than mere suppositions, and start to behave like a professional service and listen and pay attention.
That they start to take seriously that the world can change – and that it can be for the better. That Crowdfunding has already been, and can increasingly be, a huge change for good and for growth – which we badly need. Or the FCA can have a quiet life in more familiar surrounding it feels comfortable with. So what do you say Mr Osborne?
Words by Barry E James, Britain’s foremost commentator on all things Crowdfunding. He’s a founder and leading member of the Westminster Crowd Funding Forum and director of The Social Foundation and profiled here. He can be reached for interviews and questions on 07530 438932 or via Barry.James@TheSocialFoundation.org.uk or Twitter @BarryEJames