On June 8, MAS announced regulations for lending-based crowdfunding. The news wasn’t a surprise to Funding Societies, as we have always been proactive towards regulations. But it is important that you are aware of the news. In short, lending-based crowdfunding platforms will require licenses – likely in late 2016 or early 2017 after Parliament passes the regulations. The license requirement is fairly simple and we do not expect much disruption.
Some key highlights, with MAS’ full response here:
Low operational risk requirement for “dealing intermediaries, as long as they do not handle or hold customer monies, assets or positions” – the reason we painstakingly implemented escrow accounts.
Investor pre-qualification tests to show that investors have “sufficient knowledge or experience to invest” in P2B loans OR they “are suitable for [investors] in light of [their] investment objectives and risk tolerance.”
Risk disclosure acknowledged by investors on their first investment and when they’ve material change.
Credible track record of the corporate entity, shareholders and key officers.
At Funding Societies, we submitted a stricter 10-point regulatory proposal to MAS a few months back, as we are concerned about the potential destructive competition which we expressed on the Sunday Times. While we are still clarifying certain details with MAS, we believe the new regulatory announcement is a step towards the right direction.
And frankly, our team is glad that MAS has specifically debunked the rumors that promissory notes are more “legal” for crowdfunding and had been used against the intention of the promissory note. MAS’ clear advertising guidelines will also prevent misleading ads.
Rest assured that the Funding Societies team will do our very best to not only comply, but also go beyond regulations to build a healthy industry – just as we play an active role in Indonesia’s P2B-lending regulatory and industry scene.