British regulators have unveiled new rules for crowdfunding that, they say, aim to put the focus on consumer protection.

The UK’s Financial Conduct Authority (FCA) announced new rules for both loan-based and equity-driven crowdfunding that, they say, will ensure investors are better protected. “By boosting consumer protection, the rules will help ensure that consumers have access to fair, clear information that is not misleading, when using loan-based, or securities-based crowdfunding platforms,” it says.

In addition to setting disclosure requirements, the FCA’s new rules on loan-based crowdfunding also require firms running platforms to have plans in place so that loan repayments continue to be collected even if the platform runs into financial difficulty. It says that new prudential regulations will also be introduced over time so that these firms have capital to help withstand financial shocks.

In terms of equity crowdfunding, among other things, the FCA rules will limit investors to risking 10% of their available assets; although investors who take advice, or have the relevant knowledge and experience, can invest more.

“We want to ensure that consumers are appropriately protected – but not prevented from investing,” said Christopher Woolard, director of policy, risk and research at the FCA. “We have been careful to listen to feedback from the market and the rules provide consumer protection, whilst allowing businesses to continue to have access to this innovative method of funding,” he added.

The FCA’s rules will come into force on April 1, subject to transition periods; and it plans to review the implementation of the new rules by the end of this year, with a full post-implementation review of the crowdfunding market and regulatory framework in 2016.

In Canada, only Saskatchewan has formally embraced equity crowdfunding, although the Ontario Securities Commission (OSC) is planning to propose its own prospectus exemption by the end of the month, which would allow crowdfunding.

Some in the crowdfunding industry in the UK is sharply critical of the FCA’s proposed new rules, particularly the 10% limit on equity crowdfunding investments for most retail investors.

“Make no mistake, the infamous 10% rule – however it’s dressed up… takes the crowd out of equity crowdfunding,” said Barry James, founder of crowdfunding information site, The Crowdfunding Centre.