Central Bank 'at risk' advice to investors to cover crowdfunding    

The code will apply to firms operating crowdfunding services to ensure  that they show "a prominent warning message on all advertisements".

The Central Bank. File Picture.

The Central Bank has implemented EU regulations to provide “at risk” warnings to investors injecting funds into small businesses or startups through crowdfunding platforms.

It means the code will apply to firms operating crowdfunding services to ensure “any advertisement must be fair and clear and must not mislead or seek to influence consumers unduly in their investment decisions”. 

Crowdfunding service providers must show “a prominent warning message on all advertisements that investment in crowdfunding projects entails risks”.

“Crowdfunding service providers will be required to include appropriate warnings in their advertising to prospective investors,” the Central Bank said following new EU regulations.

While crowdfunding brings new funding possibilities for businesses and new opportunities for investors, it is important that investors are appropriately protected and well informed as to the potential risks.”

Gerry Cross, the director of financial regulation, said that investors have to be aware of the risks. 

“Crowdfunding provides a form of alternative finance for startups and SMEs, typically relying on small investments,” he said.

“Trust, confidence, and fair dealing are essential for any financial market or product.

“It is therefore vital that investors are made aware of the risks of any such investment.”