Response to consultation on draft RTS on Individual Portfolio Management of loans offered by crowdfunding service providers

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Q1: Do you have any comment on the elements to be disclosed as part of the description of the credit risk assessment process?

In general I would like to mention that some information requirements, which are under the RTS specific to the situation of loan portfolio management, seem to be relevant to investors whatever their nature. In other words, it is hence hard to understand why in the situation that Investor A invests in an individual transaction of project owner X and Investor B also invests in project owner X through its loan portfolio mandate, Investor B is provided with more / better information than Investor A.

Also in general, the option of loan portfolio management truly raises the question what constitutes a 'loan' in contrast to a 'security' (within the meaning of MiFID II, i.e. a financial instrument). This is quite a fundamental question to which the Crowdfunding regulation does not provide any answers. In the context of the RTS, which again is specific to loan portfolio
management, it would be extremely useful to crowdfunding service providers to have certainty that a qualification of a 'loan' is not recharacterized as a 'security'. At the same time crowdfunding service providers that currently work under a MiFID II license may reconsider of reshaping (renaming?) the propositions from financial instruments into 'loans' without materially changing the underlying economics and legal conditions of the proposition. Market practitioners would be very much aided by guidance of EBA what conceptually is a loan and under which circumstances in EBA's view a loan is effectively a security / financial instrument.

Q2: Do you agree with the information to be provided for each portfolio, in accordance with Art. 6(7)(b) and 6(4)?

What may be problematic with the current proposed requirements is that the information requirements seem to result in a situation where the crowdfunding service provider, at all times, is obliged to keep information up to date (see article 1 under 1 RTS, where the following is stated; "updated on continuous basis". Whilst for some elements it may be easy to retrieve the required information swiftly, for some information the crowdfunding service provider may be dependent on whether the project owner is capable of providing the relevant information instantly. If this is not the case, this means that the crowdfunding service provider may be in breach of its obligations under the RTS.

Q3: Based on your experience with investor information documents required under your national regulatory framework on crowdfunding: Have you seen good practices of information disclosure for loans included in individual portfolio management?

No comment.

Q4: Do you agree with the scope of credit agreements relevant for the information on past defaults to be included to Investors?

See earlier comment why investors that invest by way of loan portfolio management are receiving better / more information than 'normal' investors that invest directly in projects.

Q5: Do you agree with the content of policies and procedures that crowdfunding service providers need to have in place with respect to contingency funds?

No comments

Name of the organization

Keijser Van der Velden