Property investment platform Proptee has decided to apply for full authorisation from the City regulator, ahead of its upcoming launch.
Proptee, which allows investors to buy shares in properties in exchange for receiving a portion of the monthly rent, was originally seeking authorisation from the Financial Conduct Authority (FCA) as an appointed representative (AR) of an unnamed principal.
But the firm, which eventually plans to offer loans and an Innovative Finance ISA, has decided to apply to become directly authorised (DA) instead.
Chief executive Benedek Toth said the decision followed feedback from Proptee’s legal advisers and was down to the speed of becoming authorised as well as reputation.
“Right now AR applications are quite low and you hear horror stories of people not getting authorised and it seems people pay more attention to DAs which tends to be quicker and at this stage it’s about being quicker,” said Toth.
“Being a DA is cheaper in the long-term, without a monthly AR fee and the fee of authorisation, but for us it’s the time that it takes to become FCA authorised.
“It seems to be quicker to become a DA than an AR at the moment. Right now, it seems to take a while to get an AR application in and for the FCA to take a look. Our legal advisers suggested to go down the DA route.
“We want to be fully compliant with everything we do and want to show we are fully committed to this and one way to do it is to become a DA and do everything in house, legally protecting investors’ money.”
Proptee was originally eyeing a January launch but this has been delayed as the platform goes through testing stages and awaits FCA authorisation.
Toth was reluctant to give a fixed date for the launch, saying that the alpha testing stage will hopefully take two weeks and then the team will begin the beta testing stage while waiting for regulatory approval.
Proptee will launch its first iOS app in alpha testing for around 10 to 20 people to use and test with fake currency, before launching beta testing with people spending their real money, managed by a payments and e-money provider.
“It’s hard to predict how quick the FCA will give us the licenses and right now we’re testing our systems and making it the most user friendly as possible,” he said.
“We don’t want to disappoint any future customers of ours because it’s quite hard to launch a financial product with all the rules in place, so we are doing our best to get the systems up and running and testing them because they need to be bulletproof.
“There are many unknowns, and we are working hard with the alpha testing starting next week.”