July & August 2016 Credit Management magazine

indeed misled investors regarding the firm’s
true capabilities and readiness through a
particular promotional video.
In terms of the collapse of the Rebus
Group, James Hurley of The Times similarly
reported that investors had been misled by
the group as they didn’t disclose the full scale
of their financial problems at the time of the
pitch. He identified the lack of regulatory
controls as being an issue, resulting in a lack
of clarity and creating the risk for certain firms
and platforms to mislead potential investors.
Investors only know what they are told and
trust is a major issue. The issue can be further
compounded if they hear that company
directors are awarding themselves greater
salaries and purchasing expensive cars as
Mark Harris summarised in his findings of
Torquing, something which shows just how
little control there is on how funds are used.
Crowdfunding platforms perhaps share
With such depth of
finance and willing
investors, you would
have thought that the
company could achieve
so much more than they
had initially promised.
Unfortunately, it proved
not to be the case. The
company voluntarily
filed for liquidation on
November 18, 2015.
some of the responsibility too and various
suggestions have been made as regards how
investors can be better protected. Cash sums
could be staged, for example, with agreed
goals that need to be reached before the next
tranche of money is made available. Better
access to professional advice and guidance
should also be provided, and insisted upon,
with the Platforms acting as a conduit.
Platforms have a duty of care not only to their
investors but also a duty to protect the image
of their industry.
Crowdfunding is a sector that is going
through some testing times. What is clear
is that the lack of investor protection and
lack of compliance are creating a bad image
for a sector that is looking more tarnished as
each company failure is analysed. Investor
confidence is moving in the wrong direction
and the alarm bells should be ringing for an
industry that is still fundamentally a good idea.
The recognised standard in credit management
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