THE European Banking Authority (EBA) has called for proposed cross border peer-to-peer lending and crowdfunding regulations to go further to protect consumers.
The European Parliament is currently considering proposals to create a single market-wide crowdfunding licence that will allow platforms to operate across the EU under a single set of regulations.
But the EBA notes that this may not provide protection for consumers investing via domestic firms that are not currently regulated.
It suggests this could be remedied by introducing “harmonised consumer protection” and anti-money laundering rules for all crowdfunding and P2P firms across the EU.
“The existence of differences in regulatory status across the EU is undesirable from a level-playing-field perspective and is a source of market fragmentation,” the banking watchdog said.
“Potential risks of regulatory arbitrage are expected to be levelled out by the adoption of a harmonised EU regime applicable to crowdfunding service providers operating cross-border.
“The application of a harmonised EU regime to all, including domestic, crowdfunding service operators would ensure the application of uniform rules.”
At the moment, there is no single set of rules for EU crowdfunding platforms, with companies instead having to adhere to a variety of nationally-set regulations.
Cross border rules have previously been backed by the European Crowdfunding Network, which includes firms such as Funding Circle and Rebuildingsociety.