Central Bank warns on crowdfunding as it is not regulated

Tuesday 17 June 2014 12.14
Central Bank's codes of conduct and the protections which they provide to consumers do not apply to crowdfunding platforms.
Central Bank's codes of conduct and the protections which they provide to consumers do not apply to crowdfunding platforms.

The Central Bank has warned consumers that crowdfunding is not regulated and is a high risk form of investment.

Crowdfunding is a way in which money can be raised from a large number of individuals or organisations, to fund a business, project or personal loan, and other needs through an online web-based platform.

In a statement today, the Central Bank said its codes of conduct and the protections which they provide to consumers, do not apply to crowdfunding platforms.

It also warned that crowdfunding investors are not protected by the Deposit Guarantee Scheme or the Investor Compensation Company Limited (ICCL) scheme.

Complaints about crowdfunding can not be handled by the Financial Services Ombudsman as the FSO only deals with complaints in relation to a regulated firm, it advised.

The Central Bank said it is actively monitoring developments in this area and will continue to work closely with other European authorities in this regard.  As this work progresses, it said it may publish further information on the matter.