As we implement the new crowdfunding service provider (CSP) rules we will be asking existing
lenders and prospective lenders for more information regarding their personal financial
circumstances.
It may feel like these questions are intrusive, however the purpose of these questions is to protect
‘non-sophisticated’ lenders.
Ability to Bear Loss
As such, CSPs like us will have to simulate an investors ability to bear losses which is calculated as
10% of their net worth, based on the following information;
- regular income and total income, and whether the income is earned on a permanent or
temporary basis; - assets, including financial investments and any cash deposits, but excluding personal and
investment property and pension funds; - financial commitments, including regular, existing or future commitments.
CSPs will be required to review this simulation to bear losses every year.
Non sophisticated investors shall acknowledge that they have received the results of this simulation.
Risk Warning
Each time a non-sophisticated investor invests more than €1,000 or 5% of their net worth, they will
receive a risk warning and must give explicit consent to invest and prove that they understand the
risks.
However investors shall not be prevented from investing in crowdfunding projects.
