Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937 (“Regulation (EU) 2020/1503” or “the Regulation”) entered into force on 10 November 2021 and establishes an EU regulatory regime for crowdfunding service providers.  The new regulatory framework:

• lays down uniform rules across the EU for the provision of investment-based and lending-based crowdfunding services related to business financing; and
• requires in-scope crowdfunding service providers to be authorised and they will be subject to operational and prudential requirements as well as investor protection measures.

The Central Bank of Ireland (“the Central Bank”) is the competent authority responsible for the authorisation and supervision of crowdfunding service providers operating from and based in Ireland pursuant to the European Union (Crowdfunding) Regulations 2021 (S.I. No. 702 of 2021).

The Central Bank seeks to process each application for authorisation as expeditiously as possible while meeting its obligation to operate a rigorous and effective gatekeeper function. It aims to ensure that the application process is facilitative and accessible from the perspective of applicants and, importantly, that applicants have clarity with regard to the process, its requirements and timelines.

Following the adoption of Commission Delegated Regulation (EU) 2022/1988 on 21 October 2022. Article 48 (1) of Regulation (EU) 2020/1503 provides that a crowdfunding service provider who was providing a crowdfunding service within the State before the commencement of the Regulation may continue to provide crowdfunding services included within the scope of the Regulation until the earlier 10 November 2023 or the date upon which they are authorised under the Regulation.

A crowdfunding service provider falling within the scope of these extended transitional arrangements must obtain an authorisation from the Central Bank by the end of the transitional period on 10 November 2023 to be in a position to continue to provide crowdfunding services thereafter.

The Central Bank is therefore advising existing crowdfunding service providers availing of the extended transitional arrangements and who:

• have not yet engaged with the Central Bank about seeking authorisation as a crowdfunding service provider; or

• have had a preliminary meeting with the Central Bank but have not yet submitted an application for authorisation as a crowdfunding service provider,

to do so as soon as possible and to submit an application for authorisation as a crowdfunding service provider by 10 May 2023 to allow the application process to be completed in advance of the expiry of the transitional period on 10 November 2023.

Existing crowdfunding service providers availing of the extended transitional arrangements should also note the Central Bank’s expectation that clear progress should have been made towards meeting the requirements set out in the Addendum to the Consumer Protection Code 2012 published on 13 January 2022 and the Regulation by the time an application for authorisation as a crowdfunding service provider is submitted.

The Central Bank adopts a robust, structured and risk-based approach in order to fulfil its gatekeeper function. In this regard, the Central Bank welcomes applications where the applicant can meet the legislative requirements relating to authorisation as a crowdfunding service provider (including ESMA Technical Standards and related guidance such as ESMA Questions and Answer publications) and all other applicable legislative and regulatory requirements published by the Central Bank.

The Central Bank published details of the authorisation process, including the stages, requirements and timelines of the process, and the relevant Application Form and Guidance materials on 6 January 2022 here on its website.  An applicant needs to ensure it is familiar with our authorisation process and the relevant legislative and regulatory requirements.

An applicant must ensure that it submits a fully completed application to the Central Bank as an application can only proceed to the assessment phase of the authorisation process once it is determined to be complete.  Where all the required information and documentation has not been provided, the Central Bank will identify the missing information and set a deadline for the applicant to provide the missing information. Should an application remain incomplete after this deadline, the Central Bank may refuse to review the application and, in the event of such refusal, shall return the submitted documents to the applicant.

The Central Bank will make a decision on an application for authorisation within three months of the date that it is determined to be complete. The Central Bank will only grant an authorisation where the applicant has demonstrated that it meets all the relevant authorisation requirements.

Prior to the submission of a fully completed application (including all the required information and documentation), and in line with the first step in the authorisation process, an applicant is required to attend a preliminary meeting with the Central Bank and can contact us by emailing [email protected] with a view to arranging this meeting.

Please Note:

• This Industry Notice does not apply to entities who do not fall within the scope of the transitional arrangements for existing crowdfunding service providers provided for in Article 48 (1) of the Regulation.
• The transitional arrangements provided for under Article 48 (1) of the Regulation do not apply to crowdfunding service providers who have not carried on crowdfunding services within the State immediately before the commencement of the Regulation.In this regard, entities who intend to engage in such crowdfunding services are required to complete and submit an application for authorisation to the Central Bank and will not be able to engage in such activities until the Central Bank has granted authorisation pursuant to the Regulation. The Central Bank will make a decision on an application for authorisation within three months of the date that it is determined to be complete. The Central Bank will only grant an authorisation where the applicant has demonstrated that they meet all the relevant authorisation requirements. It is an offence for such entities to commence engaging in crowdfunding services until the Central Bank has granted authorisation pursuant to the Regulation.
• Article 48 (3) of the Regulation provides that the EU Commission may, after consulting with ESMA, extend the transitional period referred to in Article 48 (1) of the Regulation by a 12-month period. As at the date of this Industry Notice, the EU Commission has adopted Commission Delegated Regulation (EU) 2022/1988 of 12 July 2022 in accordance with Article 44 of the Regulation to extend the transitional period by a 12 month period. Existing crowdfunding service providers availing of the extended transitional arrangements are therefore encouraged to engage with the Central Bank as soon as possible and to submit an application for authorisation as a crowdfunding service provider by 10 May 2023 to allow the application process to be completed in advance of the expiry of the transitional period on 10 November 2023. Under the extended transitional arrangements, existing crowdfunding service providers must obtain an authorisation from the Central Bank by the end of the transitional period on 10 November 2023 to be in a position to continue to provide crowdfunding services thereafter.
• ‘Application’ refers to the submission of a fully completed Application Form for authorisation as a crowdfunding service provider and fully completed Individual Questionnaires (including all the specific information and documentation requested in the Application Form and Individual Questionnaire) in respect of all relevant individuals proposed to hold a Pre-Approval Controlled Function (PCF) role in the applicant.

The Central Bank is the competent authority in Ireland responsible for considering alleged infringements of Regulation (EU) 2020/1503 by crowdfunding service providers. 

Where a person wishes to report an actual or potential alleged infringement of Regulation (EU) 2020/1503, the report can be sent as a protected disclosure to the Central Bank using the following methods:

• Email: [email protected]
• Telephone: 1800 130 014 (calls are answered Monday to Friday 9.30am - 5.00pm)
• Protected Disclosures Desk, Central Bank of Ireland, PO Box 11517, Spencer Dock, Dublin 1, D01 W920.

Please ensure that “Crowdfunding Alleged Infringement” is in the subject line of your correspondence with the Central Bank.

The person making the report can also seek to have a meeting with dedicated staff members of the Central Bank.

If possible, you should submit documentary evidence to support your protected disclosure.

Information regarding alleged infringements of Regulation (EU) 2020/1503 will be treated as protected disclosures. For information in relation to the process and procedures surrounding protected disclosures, please see Protected Disclosures including Whistleblowing and Infringement Reports.

The Financial Services and Pensions Ombudsman (“FSPO”) is the independent service that helps resolve individual complaints between customers* (which includes individuals and also sole traders, partnerships and companies with a turnover not exceeding €3 million) and regulated financial services providers, including crowdfunding service providers.

A customer of a crowdfunding service provider may pursue a complaint with the FSPO, concerning the protections offered by the EU Crowdfunding Regulation.

Individual complaints against financial institutions or complaints about financial services, must first be raised with the financial institution concerned to provide it with an opportunity to respond to your complaint, in this case with the crowdfunding service provider concerned. If you are not happy with the response from the crowdfunding service provider, you have the right to refer the complaint to the FSPO. 

Details regarding the FSPO, including how to submit a complaint, are available on the FSPO’s website.

Please see the Central Bank's Consumer Hub for further information on making a complaint against a financial service provider.

* For further information on what is meant by ‘customer’ in this context, please see the definition of ‘complainant’ in Section 2(1) of the Financial Services and Pensions Ombudsman Act 2017.

The Central Bank will ensure and monitor effective compliance with Regulation (EU) 2020/1503 through its existing supervisory processes.  This includes for example:

• Assessing applications from crowdfunding service providers for authorisation in Ireland
• Examining prudential returns and reports, conducting regular review meetings and on-site inspections
• Developing systems and procedures to monitor activities and detect non-compliance by financial service providers.

For more information on the Central Bank’s approach to supervision of financial service providers see How we regulate.