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Professional & Financial Services
UK-wide
Running a crowdfunding or P2P lending platform
How to get FCA authorisation to operate a loan-based (P2P) or investment-based crowdfunding platform. Covers capital requirements, investor restrictions, client money rules, and wind-down arrangements.
Guide summary
You must get FCA authorisation before you run any loan-based or investment-based crowdfunding platform. You need at least £50,000 in capital, and more if you manage over £50 million in loans. You cannot take investment money from all customers — you must check they understand the risks and cap their investment at 10% of their net assets.
- Get FCA authorisation before you let anyone lend or invest
- Keep at least £50,000 in capital — more if you manage over £50m in loans
- Re-calculate how much capital you need whenever loans grow by 25%
- For new customers, give a 24-hour cooling-off period before they invest
- Cap restricted investors at 10% of their net assets across all risky investments
- Check each customer understands P2P lending before they invest
- Keep customer money in a separate bank account and reconcile daily
- Prepare a wind-down plan with a backup company to manage loans if you close
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Operating an electronic system for loan-based crowdfunding (peer-to-peer lending) or investment-based crowdfunding is a regulated activity. You must obtain FCA authorisation before operating.
Operating without FCA authorisation is a criminal offence. This guide covers the requirements for loan-based (P2P) platforms - investment-based crowdfunding has additional MiFID requirements.
Understanding FCA crowdfunding regulation
Which type of crowdfunding?
| Type | FCA Regulated? | What it involves |
|---|---|---|
| Loan-based (P2P) | Yes | Consumers lend money for interest and capital repayment |
| Investment-based | Yes | Consumers buy shares or debentures in businesses |
| Donation-based | No | Contributors receive nothing in return |
| Rewards-based | No | Contributors receive non-financial rewards |
Capital and financial resource requirements
P2P platforms must maintain adequate financial resources to protect investors.
Calculating your capital requirement
The requirement scales with loaned funds under management. You must recalculate whenever loaned funds increase by more than 25%.
Example: A platform with £10 million loaned funds would need capital significantly above the £50,000 minimum. Review IPRU-INV 12 for the specific calculation formula.
Investor restrictions and marketing
You cannot market P2P investments to all investors - restrictions apply.
Investor classification process
- Determine investor category at onboarding
- For restricted investors, calculate 10% of net investible assets
- Monitor investment levels against limits
- Allow reclassification when investors meet criteria (2+ P2P investments in 2 years)
Appropriateness assessment
Before accepting investments, you must assess whether P2P is appropriate for the investor.
Client money rules
If you hold client money, CASS 7 rules apply.
Avoiding client money
Some platforms structure operations to avoid holding client money - for example, by having lenders pay directly to borrowers' accounts. This removes CASS requirements but may not suit all business models.
Wind-down arrangements
You must have arrangements to protect investors if your platform fails.
Key wind-down documents
- Resolution manual: Details of critical staff, IT systems, outsourcing, bank accounts, loan data
- Standby servicer agreement: Contract with third party to take over loan administration
- Investor disclosure: Clear explanation of arrangements before first investment
Disclosure and reporting
Annual outcomes statements and regular reporting are required.
Applying for authorisation
Preparing your application
- Business plan: Detailed description of platform operations
- Governance: Senior Managers and Certification Regime documentation
- Policies: Investor restrictions, appropriateness, client money (if applicable)
- Wind-down plan: Resolution manual and standby servicer arrangements
- Financial projections: Capital adequacy and ongoing viability
Tip: Use FCA's Pre-Application Support Service (PASS) for complex platform structures.