What an ECSPR licence actually protects you from — and what it doesn't
Regulated platforms now advertise their licence on every page. It is a real improvement. It is also routinely oversold.
Since the European Crowdfunding Service Providers Regulation came into force, the sector has split into licensed and unlicensed platforms, and the licensed ones will not let you forget it.
The licence is a genuine improvement. It is not what most investors think it is.
What it does give you
- Segregation of client money. Your uninvested cash must be held separately from the platform's own funds, so it is not available to the platform's creditors.
- A regulator who can act. A national authority supervises the platform and can suspend or withdraw the licence.
- Mandatory disclosures. A standardised key investment information sheet for each offer, plus defined rules on marketing and on how returns may be presented.
- An entry test and loss-bearing simulation for retail investors, plus a four-day reflection period on new investments.
- Conflict-of-interest rules, including limits on the platform investing in offers on its own venue.
That is a meaningful package. Uninvested cash sitting in a segregated account is a real protection, and it is the one that matters most if a platform fails.
What it does not give you
Here is the part the badges leave out. The licence regulates the venue, not the credit.
- It does not make any loan safer. The borrower's ability to pay is unchanged by the platform's licence.
- It does not guarantee your capital. There is no deposit guarantee scheme and no compensation fund behind a crowdfunding licence.
- It does not stop an originator from defaulting or a buyback from failing.
- It does not guarantee liquidity. A licensed platform can still have no secondary market and no way out before maturity.
- It does not mean the regulator has reviewed individual loans. It has not.
How to use this when comparing
Treat the licence as one input among several, weighted toward what happens to your cash rather than your loans. A licensed platform with a weak originator is more dangerous than an unlicensed platform with a strong one — PeerBerry's repayment record through 2022 is a better piece of evidence than a licence granted last year.
The right way to read our comparison table is: regulation tells you how your money is held, track record tells you whether it comes back.