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are acting as security trustees or<br />
agents needs to be established, along<br />
with the level of due diligence that has<br />
been carried out on the company.<br />
For example, each bond on the<br />
Downing Crowd platform goes<br />
through Downing’s full due diligence<br />
process, drawing on over 20 years of<br />
investment management experience.<br />
A full Offer Document is issued<br />
for each fundraise, outlining the<br />
risk and returns and independent<br />
analysis is available through an<br />
in:review report.<br />
So, is crowdfunding advisable?<br />
Despite the compelling attraction<br />
of certain types of crowdfunding, it<br />
has not traditionally been considered<br />
advisable for a number of reasons,<br />
not least because of scepticism of the<br />
quality of the offers/valuations, issues<br />
with regulation and permissions.<br />
However, we are seeing an increasing<br />
number of enquiries from advisers<br />
interested in the opportunities for<br />
their clients, which suggests the tide<br />
is turning on how intermediaries<br />
view of this area of the alternative<br />
finance market.<br />
We believe that the key challenges for<br />
advisers are evaluating each client’s<br />
overall portfolio and appetite for risk,<br />
understanding the crowdfunding<br />
opportunities available and the levels<br />
of risk involved, and then assessing<br />
whether the returns are sufficiently<br />
acceptable for the level of risk taken.<br />
Debt-based crowdfunding is<br />
regulated by the FCA, which gives a<br />
further layer of investor protection.<br />
So as long as firms have the correct<br />
permissions to advise on these<br />
investments and advisers have the<br />
appropriate qualifications (located to<br />
the right), they are permitted to give<br />
advice on these opportunities.<br />
Can I advise on Crowd Bonds?<br />
Does your firm hold FCA permissions for arranging<br />
deals in investments OR making arrangements with a<br />
view to transactions in investments?<br />
Does your firm have the following permissions:<br />
YES<br />
Do you hold the right<br />
qualification e.g/ Cil<br />
Certificate in<br />
Securities Advice<br />
and Dealing?<br />
YES<br />
ADVISED<br />
In this case, you can<br />
recommend a bond<br />
or selection of bonds<br />
to your clients<br />
YES<br />
Advising on investments<br />
Customer type: Retail<br />
Investment type: Debenture<br />
NO<br />
NO<br />
INTRODUCER ONLY<br />
In this case, you can<br />
introduce clients to<br />
our platform but they<br />
must select their<br />
own bonds<br />
34 EIS Yearbook 2016/17
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