The Financial Services Authority (FSA) has warned that most crowdfunding schemes should only be targeted at sophisticated investors, amid concerns about their risk and complexity.
Crowdfunding involves a large group of people contributing money towards startup capital, or to help businesses expand, and is still considered to be a small market in the UK. However, in newly-published information for consumers, the FSA explained how most crowdfunds are not regulated, meaning there would be no Financial Omnudsman Service or Financial Services Compensation Scheme protection. And, while there may the possibility of higher returns than mainstream investments, the regulator also highlighted the rarity of dividends, the possibility of shares being diluted and the lack of...
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