Crowdlending platforms allow investors to lend money directly to borrowers for a fixed return. Five Singapore-based platforms have come together to ask for proper regulation to help the industry grow and in turn support start ups and small and medium enterprises, The Business Times said.
The platforms involved are: Funding Societies, a newly launched platform; New Union, launched in February 2014; MoolahSense, launched in November 2014; Capital March, of April 2015; and FundedHere, which has yet to launch, The Business Times said.
"Clear regulations and compliance are critical as they help to boost investor confidence and avoid the mismanagement of any platform that could threaten the reputation and credibility of this very young industry. Therefore, we are eager to have MAS regulate this industry to ensure its continuous growth," Kelvin Teo, co-founder of Funding Societies told The Business Times.
With no set rules for the sector, the operators have been trying to interpret the Securities and Futures Act (SFA) - some clauses of which MAS has said may apply to crowdlending platforms, depending on their fund-raising methods, The Business Times said.
However, not everyone is interpreting the rules in the same way. It is unclear whether crowdlending platforms can be described as dealing in securities, and so need a Capital Markets Service (CMS) licence and must register a prospectus with MAS. Each of the platforms has taken its own decisions on this and interpreted the law in different ways, The Business Times reported.
MoolahSense's chief executive Lawrence Yong said: "The crowdfunding industry should be given clear directions. It will prevent rogue players from operating under the veil of ambiguity to arbitrage services that unfairly penalises the responsible and compliant ones, and materially relax the constraints that have been imposed on our operations."
MAS told The Business Times that it has been reviewing feedback and will complete a review this year.
New Union co-founder Eddie Lee told The Business Times: "Crowdlending is a viable industry as even the more established companies look for alternative financing sources to grow their businesses. As a financial hub in Asia, Singapore is in a good position to build up its crowdlending credibility."
In March the European Banking Authority (EBA) said EU legislators need to clarify how existing EU law applies to lending-based crowdfunding. In an opinion addressed to the European Commission, the European Parliament and the Council of Ministers, the EBA identified risks to the sector and looked at how they can be addressed (40-page / 399KB PDF) in the EU legislative framework.