08 December 2021
The European Banking Authority (EBA) launched today a consultation on draft Regulatory Technical Standards (RTS) specifying the information that crowdfunding service providers shall provide to investors. The proposed requirements cover the method used for the calculation of credit scores and loan prices, the factors that the providers need to consider when carrying out a credit risk assessment and conducting a valuation of a loan, and the underlying policies and governance arrangements. The consultation runs until 8 March 2022.
Investors using crowdfunding platforms may frequently be exposed to the risk of having less information compared to project owners, and/or an incomplete understanding of the viability of a crowdfunding project or of the due diligence conducted by the crowdfunding service providers.
Therefore, it is important that adequate information is disclosed to investors on how credit scores are calculated and loans are priced. Moreover, investors need to be sure that crowdfunding service providers are subject to a minimum set of common standards in terms of credit risk assessment, governance, and risk management structures.
Against this backdrop, these draft RTS propose to require crowdfunding service providers to disclose the elements to be included in the information to investors with respect to the description of the method to calculate credit scores assigned to crowdfunding projects. The draft RTS also specify which are the elements of the pricing strategy that need to be provided to investors, and how to ensure that such pricing is indeed fair and appropriate. The draft RTS also require crowdfunding service providers to consider adequate amount of information when conducting the creditworthiness assessment of project owners and crowdfunding projects.
Finally, the draft RTS propose what policies and procedures crowdfunding service providers are required to have in place to ensure that investors are adequately informed, and that credit risk assessment and loan valuation are conducted in a sound and consistent manner.
Consultation process
Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 8 March 2022. All contributions received will be published following the end of the consultation, unless requested otherwise.
A public hearing will be organised in the form of a webinar on 25 January 2022 from 11:00 to 12:30 CET. The EBA invites interested stakeholders to register using this link. The dial-in details will be communicated in due course.
Legal basis
These draft RTS have been developed according to Articles 19(7) of Regulation (EU) No 1503/2020 (European Crowdfunding Service Providers Regulation - ECSPR), which mandates the EBA to develop, in close cooperation with the European Securities and Market Authority (ESMA), draft RTS to specify:
- the elements to be included in the information to investors with respect to the description of the method to calculate credit scores and pricing assigned to crowdfunding projects (Article 19(7)(a));
- the information and factors that crowdfunding service providers shall consider when carrying out credit risk assessment and when conducting a loan valuation, as referred in Article 4(4) (Article 19(7)(b));
- the factors that crowdfunding service providers shall take into account to ensure that the price of loans facilitated on its platform are fair and appropriate (Article 19(7)(c));
- the content and governance of the policies and procedures required for the requirement specified in Article 19 and the risk management framework related to credit risk assessment as referred in Article 4(4)(f).
