The U.K. Financial Conduct Authority said Dec. 9 that it sees the need for further regulation of the crowdfunding market, saying loan-based crowdfunding in particular may subject investors to risks that are neither fully explained nor fully understood.

Publishing interim feedback on a post-implementation review, launched in July, of rules imposed in 2014 for loan-based and investment-based crowdfunding, the FCA said it also found evidence that it can be difficult for investors to compare crowdfunding platforms and to compare crowdfunding with other asset classes; that it can difficult for investors to assess risks and returns of crowdfunding investment; and that some financial promotions fail to meet its "clear, fair and not misleading" criteria.

Loan-based crowdfunding, also known as peer-to-peer lending, is also vulnerable to insufficient planning by some firms, in the event of their failure, to run their loan books down to maturity, the FCA said, adding that it also "challenged some firms to improve their client money handling standards."

Proposals for new rules for the market will be considered in the first quarter of 2017, with consultations to be held around issuing more prescriptive requirements on the content and timing of disclosures by crowdfunding platforms; strengthening rules on wind-down plans; imposing additional requirements or restrictions on cross-platform investment; and extending mortgage lending standards to loan-based platforms.