On 4 June 2021, the European Banking Authority (EBA) issued a consultation paper on draft regulatory technical standards (RTS) on individual portfolio management of loans offered by crowdfunding service providers under Article 6(7) of the European Crowdfunding Service Providers Regulation (ECSPR).
In the consultation paper the EBA puts forward proposals with respect to disclosures and policies required for crowdfunding service providers that offer individual portfolio management of loans. First, they are required to show that the measurement techniques employed for risk assessments are based on a sufficient number of elements and are appropriate to the complexity and level of the risks underlying: (i) the single projects; (ii) the portfolio; (iii) the project owners. This will allow investors to have sufficient knowledge about the returns and risks of the projects and take informed decisions. Second, the draft RTS sets out the information that crowdfunding platforms must disclose in relation to several key characteristics of each loans included in a certain portfolio. Third, the policies that the crowdfunding platform need to have in place in relation to contingency funds are specified. These policies are aimed at ensuring that contingency funds have appropriate governance arrangements and procedures with respect to the collection of fees and disbursements of refunds. Through these requirements, the draft RTS aims at mitigating the information gaps between project owners and investors, and to ensure transparency and protection for investors.
The deadline for comments on the consultation paper is 4 September 2021