Downing Head of Crowdfunding Julia Groves: “FCA Review Is Most Welcome”

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Crowdfund Insider | | Nov 2, 2016

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Julia Groves, Downing Partner and Head of Crowdfunding, is a respected pioneer and force behind many successful digital businesses and fintech groups. Since founding ba.com for British Airways in 1994, she has instigated disruptive customer-led propositions across online retail, renewable energy and financial services market sectors.

She also developed the crowdfunding platform Trillion Fund, co-founded the UK Crowdfunding Association (UKCFA) which represents over 40 operating equity, loans and rewards crowdfunding platforms, before recently landing at Downing. In addition, Groves is a Senior Fellow of the Finance Innovation Lab, a Founding 50 member of Innovate Finance and recently completed a Non-executive Director position with Move your Money.

As a “straight-talking and passionate about making finance more democratic and energy more sustainable,” Groves works to connect innovators, platforms and investors more efficiently to originate change and induce financial reward. I recently had the pleasure of connecting with Groves via email to learn more about her views on crowdfunding regulation, Brexit, the FCA-CCAF partnership and her new role at Downing.  Our interview follows:

Erin: The FCA is in the midst of a review of crowdfunding regulations. What is your opinion of the process?

Julia: The review is most welcome, and comes at a good time. It is always helpful to engage early and before anyone has developed any fixed opinions!

Erin: Do you expect additional or updated rules? If so, which changes do you predict? Do you have any suggestions as to what issues need to be addressed? Do you believe there is sufficient transparency?

Julia: Overall I do not feel there is a need for any major change to regulations at this stage, rather we need to ensure the current regulations are more accurately and consistently interpreted by the FCA authorisation team and the industry alike.

I think it would be well worth applying the higher regulatory standards of investment-based crowdfunding to loan-based, so platforms know who is lending and can better evaluate what is appropriate and what is not, but that is not a view held by all. On the lending side the issue is clarity on what exactly is covered by the 36H rules and what is not.

Erin: Where do innovative platforms cross the line into bank-like and fund-like activities, which may mean they need additional permissions from the FCA? Is there general consensus within the industry as to the status of existing regulations?

Julia: The consensus is that the regulation is largely appropriate and proportionate and achieves a good balance between opportunity and protection for everyday investors. Particularly on the investment side we are all agreed. If it ain’t broke…

See:  UK Alternative Finance Grows by 84% to £3.2 Billion in 2015

Erin: How will The Cambridge Centre for Alternative Finance (CCAF) partnership with the FCA influence or aid in the regulatory review process?

Julia: This is a very welcome move – we need to regulate based on fact, not perception. I wasn’t impressed to see the FCA refer to a blogger in their Call for Input, nor by the fact that they no longer collect platform data from us. There is no more credible partner than the CCAF and I have a high level of confidence in its methods and the resulting quality of data.

Erin: Can the industry support the existing number of platforms?  Do you foresee a consolidation going forward?

Julia: I think we are already seeing consolidation, this is completely normal in a new industry and will make those who survive stronger. As an ex-CEO of a startup it is heartbreaking to have to face up to the probability that your own platform won’t succeed, but there is a dearth of skills in crowdfunding and fantastic opportunities to partner and grow. We are seeing established investment firms coming into the market – with the advantage of existing deal flow and investors. There has also been a slowing of new start-ups, but I hope the innovators keep coming through – financial services needs diversity and is a huge market for those that can solve the crowdfunding trilemma of Platform-Product-People.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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