Crackdown for crowdfunding

THE Financial Conduct Authority has launched a crackdown on peer-to-peer lending.

The watchdog is considering much tougher curbs for crowdfunding platforms which fail to provide sufficient financial information to investors.

The full review of the crowdfunding industry, which will be released in early autumn, is understood to demand that platforms like Funding Circle and RateSetter provide more information about the past performance of loans.

P2P lenders will also have to be more transparent about the level of checks they make on companies looking to raise money on their sites.

P2P lending works by pooling cash from investors to lend to start-ups. The industry has grown in popularity in recent years as traditional bank lending falls.

Some services, however, have been accused of masking the true performance of their loans, while others have reduced lending rates – sparking criticism investors are not being properly rewarded for the risks they take.