Changes to FCA regulation – What you need to know
As you may be aware, a few weeks ago the Financial Conduct Authority (FCA) announced changes that come into force on 1st January 2020. These changes affect the types of customers that firms like CapitalRise are able to offer investments to.
CapitalRise is now only able to offer investments to:
- Self-certified Sophisticated Investors
- High Net Worth Investors and
- Corporate Investors.
When logging in, existing members categorised as a Restricted Investor will be asked to review and confirm their investor categorisation.
If you previously categorised yourself as a Self-certified Sophisticated or High Net Worth Investor, or you invest on behalf of a business, your ability to continue investing is not impacted by these changes.
If you are currently a Restricted Investor, in preparation for reviewing your investor categorisation, please read the following FCA definitions of Self-certified Sophisticated and High Net Worth Investors.
A ‘Self-certified Sophisticated Investor‘ is one that has the knowledge and experience to invest. You can categorise yourself in this category if you have:
- Invested in two or more unlisted companies in the past two years. This includes investments with CapitalRise as well as investments made on platforms such as Seedrs and Crowdcube and also investments into private companies.
- been a member of a business angel syndicate or network for at least six months
- worked in the private equity sector or been involved in the financing of small and medium enterprises
- been a director of a company with an annual turnover greater than £1 million in the past two years.
‘High Net Worth investor’ applies to anyone who either:
- Earns over £100,000 a year
- has over £250,000 in net assets (this excludes your primary residence and pension).
Once you have reviewed and confirmed your categorisation, we will also ask you to complete a brief investor assessment in order to assess your understanding of the opportunities we offer.
If you are currently a Restricted Investor you should only update your categorisation if you are eligible to do so.
What is an Investor assessment?
The new rules also require all investors to complete a short assessment before their next investment is processed. This will allow investors to demonstrate their understanding of investing with CapitalRise and will need to be completed by all investors before a new investment can be processed.
We’ve introduced a short assessment for existing members, for which all questions must be answered correctly.
New CapitalRise members will be required to complete a similar assessment as part of the membership process.
This assessment is not meant to catch you out and you’ll have three attempts to complete it.
To remind yourself of the risks before completing the assessment, you can find an explanation of how investing with CapitalRise works and the information you’ll need to complete the test in this blog post.
What happens if I don’t update my categorisation or fail the assessment?
If you are not eligible to categorise yourself as a ‘Self-certified Sophisticated’ or ‘High Net Worth Investor’ then we will no longer be able to offer you investment opportunities.
Any existing investments you may have will not be impacted and we will continue to keep you updated on the progress of your investments.
If your personal circumstances do change and you become eligible to invest with us under the FCA’s definitions, you can revisit CapitalRise at any time and update your categorisation.
If you fail the Investor Assessment, you will be unable to invest any further funds with us at this point, but you can retake the test after one month. You will still be able to track any existing investments you may have and withdraw money from your cash balance at any time, via your CapitalRise account.
If you have any questions, please do not hesitate to get in touch with us via Live Chat on our website or over the phone on 020 3869 2620.