The FCA has published a consultation paper (CP16/4) on changes to client money rules for firms operating crowdfunding platforms. The FCA proposes rules to simplify client money requirements for firms that operate electronic systems relating to peer-to-peer (P2P) lending platforms.

The FCA proposes to allow firms that hold money in relation to both P2P and business to business (B2B) agreements to be able to elect to hold all lenders’ monies under CASS 7 if they wish to do so. Firms may then segregate P2P and B2B monies from the firms’ money together with breaching the CASS rules and without necessarily needing to distinguish between P2P and B2B agreement monies.  

In addition, the FCA proposes to extend its existing restriction against firms taking full ownership of lender monies under title transfer so that it covers the scope of the election. The FCA believes it is likely to reduce the burden of compliance for some firms with CASS.

The proposed changes are in the Client Assets Sourcebook (Amendment) Instrument 2016 contained in Appendix 1 of the consultation paper.  The closing date for responses is 11 February 2016.