The European Banking Authority (EBA) has published its final draft Regulatory Technical Standards detailing the information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
According to the EBA, the draft RTS also specifies a minimum set of commons standards with regards to information to be considered in credit risk assessments and loan valuations and the underlying policies and governance arrangements.
The EBA said, “Investors using crowdfunding platforms may be exposed to the risk of having insufficient information, and/or incomplete understanding of the viability of a crowdfunding project or of the due diligence conducted by the crowdfunding service providers.”
Therefore, the authority claims, it is important that adequate information is disclosed to investors on how credit scores are calculated and crowdfunding offers are priced. In addition, 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.
With this considered, the EBA said that these final draft RTS specifies the information that crowdfunding service providers shall disclose with respect to the method used to calculate credit scores assigned to crowdfunding projects and prices of crowdfunding offers, and how to ensure that loan pricing is fair and appropriate. The final draft also specifies the information to be considered when conducting the creditworthiness assessment of project owners and crowdfunding projects.
The final draft RTS also proposes what polices and procedures crowdfunding service providers are required to have in place to ensure that investors are informed and that credit risk assessment and loan valuation are conducted in a sound manner.
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