The UK’s Financial Conduct Authority (FCA) has released a consultation paper outlining proposed rules for the new public offer platform (POP) regime.
This framework aims to facilitate companies raising more than £5 million through public offers of securities outside regulated markets. The move is part of broader reforms to the UK’s capital markets, designed to streamline fundraising processes while maintaining robust investor protections.
MBK Search looks at what’s in the proposed changes:
Due Diligence Requirements Take Center Stage
Under the proposed rules, POP operators must conduct thorough due diligence on issuers and their securities before facilitating a qualifying public offer. This includes gathering comprehensive information about the issuer’s business model, key personnel, and financial standing. The FCA emphasizes the importance of verifying factual information and assessing the plausibility of non-factual claims. These measures aim to mitigate the risk of fraud and ensure investors receive reliable information to make informed decisions.
Disclosure Obligations Aim to Enhance Transparency
POP operators must provide investors with a detailed disclosure summary for each qualifying public offer. This document must include a summary of the information provided by the issuer, details of the verification process undertaken, and the POP operator’s assessment of the issuer’s creditworthiness. The FCA’s approach seeks to balance providing sufficient information to investors and avoiding the burdensome prospectus requirements currently in place for larger public offers.
Liability Framework Seeks to Protect Investors
The consultation paper outlines a liability regime for POP operators to hold them accountable for their gatekeeping function. While the FCA aims to avoid overly onerous requirements that could stifle market activity, it proposes that POP operators should be liable for failing to comply with the new rules. This approach aims to ensure that operators take their due diligence and disclosure obligations seriously without shifting the entire risk of investment losses onto the platforms.
Regulatory Oversight Extends to Existing FCA Rules
In addition to the new POP-specific requirements, the FCA proposes applying relevant existing rules from its Handbook to POP operators. This includes provisions related to systems and controls, financial promotions, and the Consumer Duty. The regulator’s approach seeks to leverage existing regulatory frameworks while tailoring requirements to the specific context of public offer platforms.
Demand for Compliance and Risk Management Expertise
The introduction of the POP regime is likely to create significant demand for professionals with expertise in compliance, risk management, and regulatory affairs. Financial institutions operating or considering launching public offer platforms must bolster their teams to ensure adherence to the new rules. Specifically, there will be a need for specialists who can:
- Design and implement robust due diligence processes
- Develop comprehensive disclosure frameworks
- Manage the increased liability and reputational risks associated with the POP operator role
- Navigate the interplay between POP-specific requirements and broader FCA rules
At MBK Search, we help firms find world-class talent to build champion teams across regulated markets. Let’s start building — visit our website to find out how. www.mbksearch.com
